Markets mixed for the week
Most of the benchmarks hit new record highs on Thursday but finished the week mixed. Oil prices dropped on Friday, pulling energy stocks down. Communication services and information technology shares were also weak. Small-caps outpaced large-caps, and value shares outperformed growth stocks.
Joe Biden announced his USD 1.9 trillion stimulus package on Thursday. Analysts and investors raised questions about how quickly could the plan be mplemented and how muchresistance from Republican opposition it will have.
Banking giants started the earning season on Friday, JPMorgan Chase, Citigroup, and Wells Fargo reported fourth-quarter results before trading started. Shares of all three banks fell as Wells Fargo missed revenue expectations. The mixed market results was partially caused by a 0,7% drop in December retail sales, announced on Friday, which was the third monthly decline in a row. Weekly jobless claims, reported Thursday, hit 965,000, the highest level since mid-August. Industrial production rose 1.6% in December and utility demand was higher de to colder weather in December.
European shares fell as coronavirus infections surged, the pan-European STOXX Europe 600 Index ended the week 0.81% lower, while Germany’s Xetra DAX Index declined 1.86%, France’s CAC 40 lost 1.67%, and Italy’s FTSE MIB slipped 1.81%. The UK’s FTSE 100 Index slid 2.00%, as economy shrank in November due to the imposition of a stricter lockdown.
German gross domestic product (GDP) contracted by a smaller-than-forecast 5.0% in 2020 as coronavirus restrictions negatively influenced activity. Growth probably stagnated in the fourth quarter, the statistics office said. The UK economy suffered a monthly decline of 2.6% in November, the first such contraction since April 2020. The smaller-than-expected decline was led by the services sector, as a new lockdown hit pubs, restaurants, nonessential shops, and other consumer services businesses.
Japanese stocks also closed the weak with mixed results. The Nikkei 225 Stock Average advanced 1.4% (380 points) and closed at 28,519.18 recording another multidecade weekly closing high. The large-cap TOPIX Index was about flat, however, and the TOPIX Small Index declined. The yen was little changed for the week and closed near JPY 104 versus the U.S. dollar.
Chinese stocks fell as the U.S. added another nine Chinese companies to its investment blacklist on Thursday, taking the total to 44 names that the Trump administration claims have ties to China’s military. For the week, the country’s large-cap CSI 300 Index declined 1.4% and the Shanghai Stock Exchange Composite Index shed 0.6%, according to Reuters. Shares of Chinese internet leaders Alibaba and Tencent were volatile on reports that they too would be added to the U.S. blacklist. Banks, however, rose following strong fourth-quarter earnings. The yuan currency ended the week flat against the U.S. dollar at 6.47 per dollar.