Equity Markets Conclude Year On Positive Note

Newer
04/01/2022
Older

Archived Article

This article was correct at the time of publishing however the information contained within it will no longer be current. It may also no longer reflect our views on this topic.

Share

Equity Markets Conclude Year On Positive Note

Modest gains were seen across global equity markets during last week’s holiday shortened trading period. The so called “Santa Rally” came despite surging Omicron cases across most of the world which saw several countries in Europe tighten controls ahead of the New Year celebrations. Despite that, investors were prepared to look through the case numbers, encouraged by data which shows Omicron as a mild variant of the virus.[1]

With trading volumes understandably on the thin side, the S&P500 moved further into record territory with a weekly gain of +0.9%. In the UK, the FTSE100 and FTSE250 rose by +0.2% and +0.9% respectively with the Government refraining from introducing new COVID related measures. On the Continent, the German DAX added +0.8% and French CAC40 +0.9% whilst in Japan, the Nikkei 225 was flat despite industrial production data revealing an impressive monthly growth figure of +7.2% during November. [3]

Light trading volumes were also seen in the sovereign bond markets where modest yield increases were seen in both the UK and the US. The 10-year gilt yield rose by 5bps to 0.972% whilst the equivalent duration treasury yield added a single basis point to 1.499%. As for the Eurozone, its 10-year benchmark index yield increased by 7bps although it remained firmly entrenched in negative territory at -0.179%.

Moving to commodities, Brent Crude jumped by +3.7% to $78.98 a barrel having benefitted from those lower concerns relating to Omicron. Data in the US also showed crude inventories declining for a fifth straight week2. Elsewhere, both copper and gold also concluded the year with a positive weekly rise. The former rose by +1.5% to $9,741 a tonne on the back of higher activity in China whilst the latter added +0.8% to $1,822 an ounce. [2]

Week ahead

 

The Bank of England has already published its monthly consumer borrowing data for December which showed an increase in credit card lending and reduction in borrowing during the month. Other domestic data to keep an eye on this week include PMIs for the Services and Construction sectors which are due on Thursday and Friday respectively. Moving to the US, Friday’s Labour Market report is the standout publication due whilst the Institute for Supply Management releases its PMI equivalents throughout the week.

In the Eurozone, several final PMIs for December have already been released with increased manufacturing activity seen in both France and Italy. Other data to keep an eye on from the region this week include CPI inflation and retail sales, both of which are due on Friday. In China, data group Caixin releases its PMI figures representing the smaller entities in the economy. There are no major data releases due from Japan on this occasion. [3]

[1] T. Rowe Price, 04/01/2022

[2] Refinitiv, 04/01/2022

[3] Forex Factory, 04/01/2022

 

The value of an investment may fall as well as rise. You may get back less than the amount invested.

The value of investments may fall as well as rise purely on account of exchange rate fluctuations.

Past performance is not indicative of future performance.

Source: London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). © LSE Group 2022. FTSE Russell is a trading name of certain of the LSE Group companies. “FTSE Russell®” is a trade mark of the relevant LSE Group companies and is used by any other LSE Group company under license. All rights in the FTSE Russell indexes or data vest in the relevant LSE Group company which owns the index or the data. Neither LSE Group nor its licensors accept any liability for any errors or omissions in the indexes or data and no party may rely on any indexes or data contained in this communication. No further distribution of data from the LSE Group is permitted without the relevant LSE Group company’s express written consent. The LSE Group does not promote, sponsor or endorse the content of this communication.

© S&P Dow Jones LLC 2022. All rights reserved.

The information contained does not constitute investment advice. It is not intended to state, indicate or imply that current or past results are indicative of future results or expectations.

Full advice should be taken to evaluate the risks, consequences and suitability of any prospective investment. Opinions provided are subject to change in the future as they may be influenced by changes in regulation or market conditions. Where the opinions of third parties are offered, these may not necessarily reflect those of Rowan Dartington.

Rowan Dartington is part of the St. James’s Place Wealth Management Group. Rowan Dartington & Co. Limited is a member firm of the London Stock Exchange and is authorised and regulated by the Financial Conduct Authority. Registered in England & Wales No. 02752304 at St. James’s Place House, 1 Tetbury Road, Cirencester, England, GL7 1FP, United Kingdom.