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Markets update: Markets enter December on a positive note

Oil bounced back after OPEC and other major oil producers agreed to increase production

Equities edged higher last week as the markets historic rally extended into the first week of December, writes Ian Slattery.

Ian Slattery, Zurich Investments

Despite a marked slowdown in hiring that was revealed in the November jobs report, all major US indexes reached record highs by Friday, reflecting expectations for additional fiscal stimulus. The US unemployment rate declined to 6.7% from 6.9% in November, but the participation rate also declined, indicating that more people exited the labour force. While the declining unemployment rate is encouraging, 6.7% unemployment is still historically high and a good reminder of just how much damage the pandemic has inflicted on the labour market.

Oil bounced back after OPEC and other major oil producers agreed to increase production more gradually than previously planned and the dollar hit a new two-and-a-half-year low against major currencies.

Oil bounced back after OPEC and other major oil producers agreed to increase production

The European Central Bank (ECB) will meet on Thursday to discuss monetary policy options and interest rate decisions. With current policy rates at -0.50%, it is rather unlikely ECB policymakers will opt to lower interest rates further into negative territory.

The pound is slipping as traders who had speculated on a weekend Brexit trade deal were left disappointed. There are signs of hope, though, as the UK and European Union strive to finalize a deal before Monday evening.

Earnings comes back into focus once more this week, with upcoming earnings announcements from Ashtead, Ted Baker and Frasers Group, the former Sports Direct group.

Equities

Global markets were up last week up by 0.7% in euro terms and 2.2% in local terms. Year to date the UK market is down -17.1% in euro terms and -11.9% in local terms. The influential US Market was up 0.6% in euro terms and 2.1% in local terms.

Fixed Income & FX

The US 10-year yield finished at 0.94% last week. The German equivalent finished at -0.58%. The Irish 10-year bond yield finished at -0.29%. The Euro/US Dollar exchange rate finished at 1.21, whilst Euro/GBP finished at 0.91.

Commodities

Oil finished the week at $45 per barrel. Gold finished the week at $1,829 per troy ounce up 20.5% year to date in local terms and 11.8% year to date in Euro terms. Copper finished the week at $7,751 per tonne.

The week ahead

Tuesday 8th December

Eurozone preliminary Q3 GDP.

Thursday 10th December

European Central Bank (ECB) interest rate decision.

Friday 11th December

US Congress funding bill deadline.

About: Zurich Investments

The team at Zurich Investments is a long established and highly experienced team of investment managers who manage approximately €25.7bn in investments of which pension assets amount to €14.7bn. Find out more about Zurich Life’s funds and investments here.

The team at Zurich Investments is a long established and highly experienced team of investment managers who manage approximately €25.7bn in investment of which pension assets amount to €14.7bn. To find out more about Zurich Life’s funds and investments,
w: zurichlife.ie/funds,
Twitter: @ZurichLife,
LinkedIn: linkedin.com/company/zurich-life-assurance-plc

Warning: Past performance is not a reliable guide to future performance. Benefits may be affected by changes in currency exchange rates. The value of your investment may go down as well as up. If you invest in these funds you may lose some or all of the money you invest

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