The Weekly Wrap – COVID-19 Woes Hit the Global Equity Markets

The Stats

It was a relatively busy week on the economic calendar, in the week ending 29^th January.

A total of 57 stats were monitored, following 74 stats from the week prior.

Of the 57 stats, 40 came in ahead forecasts, with 15 economic indicators coming up short of forecasts. There were 2 stats that were in line with forecasts in the week.

Looking at the numbers, 33 of the stats reflected an upward trend from previous figures. Of the remaining 24 stats, 21 reflected a deterioration from previous.

For the Greenback, it was back into the green to mark a 3^rd weekly gain in 4-weeks. The Dollar Spot Index rose by 0.38% to $90.584. In the previous week, the Dollar had fallen 0.59% to 90.238. The weekly loss marked a 6^th gain in 10-weeks.

Out of the U.S

It was a relatively busy week on the economic data front.

In the 1^st half of the week, January consumer confidence and December core durable goods and durable goods orders were in focus.

The stats were skewed to the positive, with consumer confidence seeing a pickup at the turn of the year.

Core durable goods rose by a further 0.7%, following a 0.8% rise in November.

Durable goods rose by a modest 0.2%, however, following a 1.2% increase in November.

On Thursday, the stats were also skewed to the positive.

In the week ending 22^nd January, initial jobless claim stood at 847k, down from 914k from the previous week.

The U.S economy saw further growth at the end of the year, expanding by 4% in the 4^th quarter. While in line with forecast, the pace of the recovery slowed markedly from the 3^rd quarter.

At the end of the week, personal spending and Chicago PMI figures also drew attention.

Personal spending fell by 0.2% following a 0.4% decline in November. Chicago’s PMI figures impressed, however, with the PMI rising from 59.5 to 63.8 in January.

Other key stats in the week included inflation, trade, and housing sector data. These stats had a muted impact on the markets, however.

On the monetary policy front, the FED was also in action mid-week.

There were no moves, which was in line with market expectations. FED Chair Powell looked to assure the markets that there would be no tapering of the asset purchasing program. Powell’s assurances failed to convince the markets, however, leading to a jump in the Dollar and a slide in equities.

In the equity markets, the NASDAQ slid by 3.49%, with the Dow and the S&P500 seeing losses of 3.27% and 3.31% respectively.

Out of the UK

It was a relatively quiet week on the economic data front.

Key stats included December claimant counts and November employment figures and unemployment rate.

The stats were skewed to the positive. Claimant counts rose by just 7k, after having risen by 38.1k in November.

Employment fell by 88k in November following a 144k slide in October. As a result of the decline, however, the unemployment rate ticked up from 4.9% to 5.0%.

In the week, the Pound rose by 0.16% to $1.3708. In the week prior, the Pound had risen by 0.71% to $1.3686.

The FTSE100 ended the week down by 4.30%, following a 0.60% slide from the previous week.

Out of the Eurozone

It was a relatively busy week on the economic data front.

In the 1^st half of the week, German business and consumer sentiment figures were in focus.

The stats were skewed to the negative as the 2^nd wave of the pandemic and extended lockdown measures weighed.

At the end of the week, 4^th quarter GDP figures for France, Germany, and Spain were in focus.

While 1^st estimate GDP numbers were better than expected, a marked slowdown in the pace of the economic recovery was evident.

The French economy contracted by 1.3%, quarter-on-quarter. Both Germany and Spain reported growth, though these were modest. The Spanish economy grew by 0.4%, with Germany’s economy growing by 0.1%.

Other stats in the week included French consumer spending, German employment and Spanish inflation figures.

While skewed to the positive, the stats had limited impact on the EUR and the European majors.

Extended lockdown measures across EU member states and low vaccination rates limited the impact of the data.

For the week, the EUR fell by 0.29% to $1.2136. In the week prior, the EUR had fallen by 0.74% to $1.2171.

For the European major indexes, it was a bearish week. The DAX30 and the EuroStoxx600 fell by 3.18% and by 3.11% respectively, with the CAC40 seeing a more modest 2.88% loss.

For the Loonie

It was a particularly quiet week.

Key stats were limited to November GDP and December RMPI figures.

In November, the Canadian economy grew by 0.7% following 0.40% growth in October.

The RMPI jumped by 3.5% in December, following a more modest 0.6% rise in November.

While the stats were upbeat, negative sentiment towards the global economic outlook and demand for crude oil weighed.

In the week ending 29^th January, the Loonie fell by 0.35% to C$1.2777. In the week prior, the Loonie had fallen by 0.01% to C$1.2733.

Elsewhere

It was a mixed week for the Aussie Dollar and the Kiwi Dollar.

In the week ending 29^th January the Aussie Dollar fell by 0.92% to $0.7644, while the Kiwi Dollar ended the week up by 0.06% to $0.7193.

For the Aussie Dollar

It was a quiet week.

Key stats included inflation, business confidence, and private sector credit numbers.

It was a mixed bag on the economic data front.

Business confidence waned at the end of the year, with the NAB Business Confidence Index falling from 12 to 4.

Private sector credit picked up at the end of the year, however, rising by 0.3%. In November, private sector credit had risen by just 0.1%.

Inflation figures were mixed, however. Consumer prices rose by 0.9% in the 4^th quarter, following a 1.6% jump in the 3^rd quarter.

The annual rate of inflation picked up from 0.7% to 0.9% providing some support, however.

For the Kiwi Dollar

It was a quiet week.

Trade figures for December were in focus late in the week.

As a result of lockdown measures, imports fell by the largest amount since December 2009 at the end of the year.

Exports only saw a modest increase supported by high demand for breathing equipment.

The stats reflected the impact of containment measures on the NZ economy, which was ultimately Kiwi Dollar negative.

A Friday rebound, however, delivered the upside for the week.

For the Japanese Yen

It was a relatively busy week.

Retail sales, inflation, and industrial production were in focus in the 2^nd half of the week.

The numbers were skewed to the negative, with retail sales falling by 0.3% and industrial production by 1.6% in December.

A slower rate of decline in consumer prices was of little comfort. In January, Tokyo core consumer prices fell by 0.4% year-on-year. In December, core consumer prices had fallen by 0.9%.

The Japanese Yen fell by 0.87% to ¥104.68 against the U.S Dollar. In the week prior, the Yen had risen by 0.07% to ¥103.78.

Out of China

It was a particularly quiet week on the data front.

There were no material stats to provide the broader market with direction.

The lack of stats left industrial profit figures for December in focus, which were skewed to the positive.

For the calendar year 2020, profits rose by 4.1%, with profits up by 20.1% year-on-year. Profits had been up by 15.5% year-on-year, in November.

In the week ending 22^nd January, the Chinese Yuan rose by 0.83% to CNY6.4283. In the week prior, the Yuan had fallen by 0.02% to CNY6.4819.

The CSI300 slid by 3.91%, with the Hang Seng ended the week down by 3.95%.