Market Update

This week’s equity market story sounds like a familiar tune: the ongoing battle between the immediate impact of the coronavirus and the long-term optimism stemming from vaccine developments.
Despite this recurring theme, the clear victor was the UK’s FTSE-100, which concluded the week with an impressive 3% gain. The approval of Pfizer’s coronavirus vaccine cast a ray of hope, significantly enhancing the UK’s recovery prospects. This positive news contrasted with Germany’s decision to extend lockdown restrictions until January 10, 2021, and the Mayor of Los Angeles ordering residents to stay home due to rising coronavirus cases and deaths.
In the US, indices also ended the week on a positive note, indicating that we might be reaching a point where bad news paradoxically becomes good news. For instance, the nonfarm payroll growth of 245,000 reported on Friday, December 4, 2020, was slower than expected. This might intensify pressure on Republicans and Democrats to collaborate on a new US fiscal stimulus plan, beneficial for households and businesses adversely affected by the coronavirus and subsequent lockdowns. Such a development could bolster equity markets.
Additionally, this week's economic data suggests that the global economy continues its recovery trajectory despite the resurgence in coronavirus cases. Chinese PMIs and activity data confirmed the country's robust economic performance. In the US, continuing claims for unemployment benefits dropped from 6.09 million to 5.52 million, indicating positive progress.
Looking ahead to the upcoming week, there are notable events on the horizon. The US will release CPI inflation data and weekly jobless claims. The UK will provide GDP data for October, alongside figures for industrial and manufacturing production. Additionally, there is an ECB monetary policy meeting scheduled, and who knows, there might even be an announcement regarding a Brexit trade agreement!