Market Round-up: 23-27 November

Thomas Watts

With yet more positive COVID vaccine data being released during the beginning of the week, it seems that global markets were not yet immune to some profit taking, as markets trod water during the majority of the week.


This week

Receiving yet another shot in the arm on Monday, it was announced that a collaboration between Oxford University and UK drug maker AstraZeneca had produced their candidate, which could potentially be rolled out before Christmas. However, AstraZeneca itself failed to have its booster shot, falling 3.8% on the day as its vaccine proved to be only 70% effective, its largest  one-day fall in six months.

Although the pharmaceuticals giant said its potential vaccine can be 90% effective, its average rate was lower than for Pfizer-BioNTech’s and Moderna’s, which showed efficacy rates of about 94% to 95%. Pulling the rest of the blue-chip FTSE 100 down with it, it was the more domestically orientated FTSE 250 that managed to pass the test, rising nearly half a percent as Cinema chain, Cineworld, powered to the top of the charts after securing waivers for its debt covenants until June 2022, along with $450 million in new loans. 

If AstraZeneca’s news failed to inject some life into markets, the following day’s news that US President-elect Joe Biden got the formal go-ahead to begin his transition to the White House, certainly did. Also spurred on by news that Joe Biden was  looking to nominate former US Federal Reserve Chair, Janet Yellen, as Treasury Secretary, US indices ended on record highs.  Japan’s Nikkei closed at its highest since 1991 with European stocks also joining the party, ending at their highest since February. 

Such a wave of optimism was somewhat doused by the end of the week as investors focused on a raft of economic data that showed just what damage the COVID-19 pandemic is still wreaking. US jobs data showed that Americans filing first-time claims for jobless benefits increased further last week, suggesting that an explosion in new COVID-19 infections and business restrictions were boosting layoffs and undermining the labour market recovery.

Domestic retail sales numbers also told a story, showing volumes fell in the year to November, but online sales rose at the fastest pace in two years according to the latest data. The survey of 114 firms, of which 57 were retailers, found that overall retail sales volumes fell in the year to November at a similar pace to the previous month. However, internet sales grew at the fastest pace since October 2018, suggesting a heavy impact brought about by lockdown 2.0.

Next week

As November transitions over into December, investors should be in for a busy week as a raft of economic data could potentially pave the way for the traditional “Santa Rally”, a period where global markets outperform towards the end of the year.

If we peek behind door No 1 of the economist’s advent calendar on Tuesday, we will see the release for the UK’s Final Manufacturing PMI data. Wondering just what to make of everything the nation makes, the data is fairly simple to understand; a reading above 50 will indicate expansion, whilst below will signal contraction.  Although the UK is not as heavily manufacturing focused as it used to be, transitioning to a more services based economy, heavy industry still has a large part to play and economists will be hoping the recent trend of strong expansion since March’s COVID induced nadir continues. 

Across the pond, Wednesday will see US Federal Chair, Jay Powell testify before the House Financial Services Committee. With investors mixed over when and even if the US central bank will release more stimulus into the economy, the address will be closely scrutinised. The testimony usually comes in two parts: first Powell will read from a prepared statement, then the committee will hold a question and answer session. Since the questions are not known beforehand, they can make for some unscripted moments that lead to amplified market volatility. 

The first Friday of the month wraps up the week as always with US Non-Farm Payroll data. A key piece of information when determining the US central bank’s next rate move, the employment data. The numbers will be accompanied by Average Hourly Earnings allowing us to gauge how inflation may manifest in the world’s largest economy.  With the Fed stating that it will allow inflation to “run hot” over the coming period, it will be interesting to see if prices are rising as COVID infections continue to rise.

The information in this blog or any response to comments should not be regarded as financial advice. If you are unsure of any of the terminology used you should seek financial advice. Remember that the value of investments can go down as well as up, and could be worth less than what was paid in. The information is based on our understanding in November 2020.