Global equity markets faced heavy selling pressure on Friday after news broke of a new potentially more contagious coronavirus variant being identified in South Africa. The UK immediately banned travel from the country with several countries around the Eurozone also taking similar measures. The news compounded what was a difficult week for the Eurozone on the COVID front with both Austria and the Netherlands reintroducing strict lockdown measures to combat spiralling cases. Widespread protests were reported in both countries with the likes of Belgium and Italy also bringing in tougher controls.
The German DAX and French CAC40 slumped by -5.6% and -5.2% respectively as investors assessed what the economic fallout of the new variant could be. In the UK, the FTSE100 recorded a -2.5% fall, a less pronounced fall than its European neighbours on the back of further weakness in Sterling. That drop in the pound had a greater impact on the more domestic centric FTSE250 which declined by -4.1%. It was a holiday shortened week in the US on the back of thanksgiving celebrations but that wasn’t enough to prevent a decline in the S&P500 which fell by -2.2%. Japan also succumbed to a weekly fall with the Nikkei 225 dropping by -3.3%.
Given the nervousness in equity markets, it wasn’t a surprise to see sovereign yields retreat. Gilt yields fell across the curve with the 10-year closing the week at 0.82%, a 6 basis points (bps) fall on the prior week. Across the Atlantic, the equivalent duration Treasury yield fell by 5bps to 1.47% although moves on the Continent and Japan were much more muted. The 10-year Eurozone benchmark and Japanese government bond yield were unchanged at -0.25% and 0.09% respectively.
Commodities also endured a difficult week with Friday seeing one of the sharpest falls for oil since the early days of the pandemic. Brent crude fell by more than -10.0% on Friday alone having started the week on strong footing; it recorded a weekly decline of -7.7% to $72.93 a barrel as traders priced in another potential demand slump. Gold dropped by -3.2% to $1,799 an ounce, reflective of last week’s strength in the US Dollar whilst copper finished the week at $9,572 a tonne following a weekly fall of -1.9%.
The Bank of England publishes its monthly consumer borrowing statistics on Monday morning which will provide insight into areas like mortgage approvals and credit card lending. Meanwhile on Wednesday, Nationwide releases its House Price Index, a closely monitored pricing gauge which is expected to have increased once again last month. In the US, the Institute for Supply Management releases PMI equivalents throughout the week whilst on Friday, the latest Labour Market Report is expected to show a further decline in the jobless rate.
Preliminary GDP data is due from France on Tuesday with other headline Eurozone data to keep an eye on including inflation, PMI’s and unemployment being released throughout the week. PMIs are also the standout data due from China this week, both official numbers from the government and private one’s from media group Caixin. It’s a particularly busy week for Japan with retail sales, unemployment, and industrial production amongst the more notable figures due.
Read last week's market update
 World Health Organisation - 28.11.21
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