Market Round-up: 30 November - 4 December

Andrew Triggs


This week

With lockdown in parts of the UK coming to an end this week, allowing restaurants and pubs to reopen, it was refreshing to see that the takeaway market, especially in London, remained strong. With Brexit negotiations continuing throughout the week, it was reported that Wednesday saw particularly lengthy discussions lasting well into the night with pizzas having to be ordered to Westminster as both sides attempted to end the deadlock. 

With markets having come off one of the best months in their history, Tuesday saw domestic bourses grab a piece of the action, with both the blue-chip FTSE 100 and the domestically-focused mid-cap FTSE 250 enjoying their best sessions in three weeks. Markets were spurred on by upbeat Chinese factory data, which showed activity within the world’s second largest economy accelerated at the fastest pace in a decade during November. The good news was not just confined to the Orient as British factories also showed their fastest growth in almost three years. 

With mining, oil and UK listed Asian bank stocks leading the way to a 1.9% rise for the large caps, there was also good news for domestic housebuilders, mainly found in the FTSE 250 as data showed that British house prices rose by the most in nearly six years during November, pushing the overall index up by 2.6%. The FTSE 100 has rallied nearly 30% from eight-year lows in March, on the back of unprecedented fiscal and monetary stimulus and more recently, signs that an effective COVID-19 vaccine would be available before the end of the year. However, the main index has still failed to deliver compared to other developed benchmarks, still sitting 16% down for the year.

A key takeaway from the week was also to be found stateside as US bourses hit record highs despite a backdrop of record Coronavirus cases and poor economic data. Statistics released revealed the number of Americans filing first-time claims for jobless benefits fell last week but remained extraordinarily high at 712,000 while a separate survey showed US services industry activity slowed to a six-month low in November. The worries weren’t enough to stop the S&P 500 and tech-heavy NASDAQ from reaching new highs with plane manufacturer Boeing leading the way after budget airline Ryanair ordered 75 additional 737 MAX jets with a catalogue value of $9 billion.

As is customary the first Friday of the month sees the release of US nonfarm payrolls jobs data. The figure came in below expectations with only 245,000 jobs added to the economy during the month, against an expected 469,000 jobs. The figure was also the slowest pace of job creation in six months, highlighting that the resurgence of COVID-19 in the US may be impacting growth. 


Next week

With Brexit negotiations seemingly on a knife-edge, domestic investors focus could switch from the euphoria of a COVID-19 vaccine to the very real chance of a no deal Brexit. 

With talks set to go down to the wire, it will be interesting to see what those on the continent make of it all, or at least what they are making, as Tuesday sees the release of German Industrial Production figures. With Germany being one of the world’s leading exporters, their data acts as a bellwether for the broader global economy and should make for compelling analysis. The numbers themselves are considered a leading indicator of economic health as production reacts quickly to ups and downs in the business cycle and is correlated with consumer conditions such as employment levels and earnings. 

With the news that UK house values are reaching all-time highs again, Halifax’s HPI data, also released at the beginning of the week, should provide a gauge of how the domestic economy is faring. The numbers represent the UK’s earliest report on housing inflation but usually produce only a mild reaction as buying and selling prices are not always correlated. However, their data still acts as a leading indicator as to the state of the UK’s housing market as rising house prices attract investors and often spur industry activity. With the chancellor’s stamp duty cut seemingly doing its job, it will be interesting to see if this trend continues much further. 

The coming week will be wrapped up back on the continent as the European Central Bank (ECB) is due to address the media with its latest economic forecast for the bloc. Christine Lagarde, President of the ECB, will also give hints as to future rate policy and further stimulus for an economy that has been blighted by the outbreak of COVID-19. As head of the central bank which controls lending rates as well as having more of an influence over the value of the common currency than most others, those following the currency markets will scrutinise her words for any hints as to future rate policy.