Weekly market recap 25.1.2021

US election stock market

Stocks making new highs on Biden´s aid for economy

The major indexes advanced last week, hitting new intraday highs on Thursday, then retreating.

Netflix reported a surprisingly large number of new subscribers, which caused a sharp gaing in its share price and made the cummunication services sector to gain too.

Facebook and Google’s parent company, Alphabet, were also strong, as were video-gaming stocks, while energy shares lagged as oil prices fell back on a surprising rise in U.S. inventories. Trading volumes remained exceptionally high, reflecting, in part, heavy participation by individual investors. The market was closed on Monday in observation of Martin Luther King Jr. Day.

The early gains on the markets were driven by the substantial new stimulus under the Biden administration. Investors were also encouraged by Janet Yellen´s statement that Joe Biden was focused on supporting the economy rather than raising taxes. Biden’s inauguration on Wednesday took place without any significant protests or violence, which also seemed to calm nerves on Wall Street.

EU

The STOXX Europe 600 Index finished the week flat. Germany’s Xetra DAX Index rose 0.63%, France’s CAC 40 fell 0.93%, and Italy’s FTSE MIB slid 1.31%. The UK’s FTSE 100 Index fell 0.60%, partly held back by the British pound’s strength relative to the dollar and fears that the strict coronavirus lockdown would not end anytime soon.

A Purchasing Managers’ Index suggested that business activity in the eurozone contracted at a faster rate in January, as renewed lockdowns weighed on services. However, factory output expanded for a seventh month, albeit at a slower rate, due to growth in new orders and exports. Governments continued to extend lockdown measures amid concerns about the spread of highly infectious mutations of the coronavirus. Germany extended its tough lockdown restrictions until February 14. The Dutch government imposed the first nationwide curfew since World War II.

Japan

Japanese stocks were unchanged for the week. The Nikkei 225 Stock Average advanced 0.4% (112 points) and closed at 28,631.45 and recorded another multi-decade weekly closing high. For the year-to-date period, the widely watched market yardstick is ahead 4.3%. The large-cap TOPIX Index was about flat, however, and the TOPIX Small Index modestly declined. The yen was little changed for the week and closed near JPY 104 versus the U.S. dollar.

The central bank said that it intends to continue its quantitative and qualitative monetary easing measures for as long as it takes to achieve its price stability target of 2% core inflation. The monetary policy committee trimmed its gross domestic product (GDP) growth forecast for the current fiscal year (ending March 31, 2021) to -5.6% from -5.5% and it raised its target for current fiscal year 2021 to 3.9% from 3.6%, due to the stimulus package.

China

Chinese stocks rallied amid strong economic data and on hopes of warmer U.S.-China relations under President Biden. The Shanghai Composite Index advanced 1.1% to 3,606.8 and the CSI 300 large-cap index rose 2.0%, closing at 5,569.8. China’s three biggest telecom companies appealed the New York Stock Exchange’s recent decision to delist their U.S.-listed shares, a move that is expected to receive a response within 25 days.

China’s economy grew by 2.3% in 2020, near forecasts and underscoring the country’s remarkable recovery from prior-year coronavirus lockdowns. Fourth-quarter real gross domestic product growth accelerated to 6.5% year-on-year, making China the only major economy to regain its pre-virus trend.