Market Update

As illustrated in the provided table, the conclusion of the year didn't exactly warrant celebration; it was a subdued finale to a challenging year that many are relieved to bid farewell.
Amid the quiet market activity, there were several positive developments, offering a glimmer of hope as we stepped into the new year. Notably, the UK approved the Oxford/AstraZeneca coronavirus vaccine, a pivotal step given its suitability for rapid mass vaccination, potentially immunizing a significant portion of the UK population by summer. Additionally, the rollout of the Pfizer vaccine across the EU commenced, further bolstering market optimism and extending the recent rally into the new year.
On the political front, a Brexit trade agreement was reached. While not perfect for UK companies, it did alleviate much of the uncertainty surrounding their future trading relationship with the EU. The agreement led to a strengthening of the pound, reaching $1.3672, its highest level since April 2018. However, this surge in the pound's value had adverse effects on the FTSE-100, which fell by 0.64%. For the FTSE-100, a strong pound is detrimental as it reduces returns for exporters and the value of overseas earnings, considering around two-thirds of the FTSE-100's total revenue is derived from abroad.
The most significant development, however, was the signing of a $2.3 trillion stimulus package by Donald Trump. This move potentially increased fiscal aid for most Americans from $600 to $2,000, injecting vital momentum into the US economic recovery. While the package faced opposition from Senate Majority Leader Mitch McConnell, all eyes turned to the Senate run-off elections in Georgia, slated for the following week. The outcome of these elections could potentially flip control of the Senate, with Democrats gaining power in both houses of Congress and the White House. Such a shift could lead to an even more substantial stimulus package than the current $2.3 trillion proposal.
In the week ahead, the focus remains on the pivotal Senate run-off elections in Georgia, scheduled for January 5, 2021. Data-wise, the weekly US jobless claims data on Thursday (January 7, 2021), along with US employment data including non-farm payrolls, unemployment rate, participation rate, and average earnings on Friday, are of particular interest. Given the recent imposition of stricter lockdown restrictions, these figures will provide crucial insights. Additionally, other notable data points include ISM (Institute for Supply Management) data and factory orders in the United States. Internationally, attention turns to Eurozone CPI inflation and retail sales, as well as Chinese Caixin PMI (Purchasing Managers’ Index).