Weekly Market Update

Author : Rachel Poole
Date : January 16, 2021

Global Market News

Global equities down on the week
Global equities were down on the week despite President-Elect Joe Biden’s proposal of another Covid-19 relief package. The yield on the US 10-year Treasury note changed little on the week, ending at 1.09%. The price of a barrel of West Texas Intermediate crude oil continued increasing this week, hitting $52.18 at market close, while the CBOE Volatility Index (VIX) moved up a few points to 24.

Banks kick off earnings season
Several big banks kicked off earnings season on Friday as JP Morgan, Citigroup, and Wells Fargo all announced that they beat 2020’s fourth quarter earnings estimates. This was the first set of earnings since the Federal Reserve allowed lenders to resume share buybacks. So far this year, the financials sector has outperformed the market.

Updated Market Figures

Coronavirus Updates

Covid-19 by the numbers
Global Confirmed Covid-19 cases: 93,300,000 Global Covid-19 deaths: 2,000,000
US Confirmed Covid-19 cases: 23,400,000 US Covid-19 deaths: 389,000
*As of Friday evening

WHO scientist warns herd immunity is unlikely achievable in 2021
Soumya Swaminathan, chief scientist for the World Health Organization, said it is unlikely that the world can achieve herd immunity against Covid-19 this year and has urged countries to continue social distancing as they roll out vaccination campaigns. While many developed nations have begun vaccinating their populations (and have purchased most of the world’s available vaccine supply), many of the world’s poorest nations have yet to begin.

Geopolitics Spotlight

Germany’s governing party selects new leader
Today, Germany’s governing party, the Christian Democratic Union (CDU), chose Armin Laschet to be its next leader. Laschet is currently the prime minister of the German state of North Rhine-Westphalia and is a more centrist figure than the two other candidates he went up against. It is very likely that Laschet could succeed Angela Merkel as chancellor later this year when elections will be held.

Uganda holds tense elections
Millions of Ugandans headed to the polls this week to vote in Uganda’s presidential and parliamentary elections. The last few months of campaigning have been marred by killings and violence in the government’s efforts to squash the opposition. President Yoweri Museveni is seeking a controversial sixth term. His most prominent opposition candidate is Bobi Wine.

US Social & Political Developments

Trump impeached by the House for historic second time
With only days left in office, President Donald Trump was impeached by the House of Representatives. Democrats were joined by ten Republicans to impeach Trump for inciting the insurrection of the US Capitol building on January 6th. It is unclear whether or not the Senate will hold a trial. If he were convicted by the Senate, he would be barred from running for office in the future. This is the first time in American history that a president has been impeached twice by the House of Representatives.

Biden begins laying out his economic agenda
Friday, President-Elect Biden announced his proposal for a $1.9 trillion Covid-19 stimulus package which would include $1,400 stimulus checks for individuals, enhanced unemployment benefits, and billions in aid for state and local governments. While support for the additional fiscal stimulus is expected, it will most likely end up being a smaller package than what has been proposed, especially since it would come on the heels of Congress’ $900 billion package.

Corporate/Sector News

Smartphone maker Xiaomi is added to the blacklist of Chinese military companies
Chinese smartphone maker Xiaomi is the latest company to be added by the Trump administration to the blacklist of alleged Chinese military companies. Following the announcement, the company’s Hong Kong-listed shares fell 10.6%. American investors are now restricted from buying the Xiamoi’s shares or related securities.

Big American banks delist structured products linked to Chinese companies
The China crackdown seen on Wall Street is spreading to America’s big banks. Goldman Sachs, JPMorgan, and Morgan Stanley have announced they will delist 500 Hong Kong-listed structured notes linked to China Mobile, China Telecom, China Unicom, and local indexes such as the Hang Seng Index.

Tech and healthcare companies to create Covid-19 immunity passports
A team of healthcare and tech companies, including Microsoft, Oracle, Salesforce, and Mayo Clinic, is collaborating to create a Covid-19 vaccination passport. This vaccination passport would allow businesses, airlines, and countries to check if people have received the Covid-19 vaccine. While the prospect is very interesting, there are privacy and ethical concerns surrounding the project.

This week from Black Summit

Taxes, Royalties, and Idea Generation – Joel Charalambakis
Covid-19 and the Day After – Tyler Thompson and Rachel Poole

Image of the Week

Video of the Week

Are we in a stock market bubble? | Charts that Count
Source: Financial Times