Stocks moved sharply lower in the holiday shortened trading week, as concerns in relation to a new COVID variant came to the fore, writes Ian Slattery.
Stocks in Europe finished down over 4% on Friday, with the US faring better although still down 2.5%.
Oil fell over 10% which was the biggest fall since WTI fell into negative price territory in May 2020. Investors flocked to safer assets with the US ten-year treasury yield (which moves inversely to price) down 16 basis points in its biggest move since November of last year.
The week had started in a positive fashion, as on Monday morning President Biden announced that he planned to renominated Jerome Powell as Federal Reserve Chair. Biden also plans to nominate Lael Brainard as the Vice-Chair with markets reacting optimistically to the bipartisan continuity appointment of Powell.
It is possible that market sentiment will continue to swing based on the latest COVID updates.
The US also saw the lowest level of weekly jobless claims since 1969 as European data also surprised to the upside.
The Eurozone PMIs saw Services rise to 56.6 with manufacturing at 58.6, both well in expansionary territory and driven by strong data in both Germany and France. The UK also saw the fastest rate of new business orders since July which may well set the stage again for serious interest rate rise discussion at the next Bank of England meeting.
There is plenty of economic data to look forward to this week, including Chinese PMIs and further inflation data before the US jobs report on Friday. However, it is possible that market sentiment will continue to swing based on the latest COVID updates.
Global stocks were down last week by -2.8% in euro terms and down -2.2% in local terms. Year-to-date global markets are up 27.5% in euro terms and 17.9% in local terms. The US market, the largest in the world, was down -2.4% in euro terms and -1.8% in local terms.
Fixed Income & FX
The US 10-year yield finished at 1.53% last week. The German equivalent finished at -0.33%. The Irish 10-year bond yield finished at 0.17% to remain in positive territory. The Euro/US Dollar exchange rate finished at 1.13, whilst Euro/GBP finished at 0.85.
Oil finished the week at $72 per barrel and is up 60% year-to-date in euro terms. Gold finished the week at $1,794 per troy ounce and is up 2.5% year-to date in euro terms. Copper finished the week at $9,572 per tonne.
The week ahead
Tuesday 30th November
Eurozone Inflation and Chinese PMI data goes to print.
Thursday 2nd December
OPEC meets to decide their latest oil production targets.
Friday 3rd December
US non-farm for November is published.
About: Zurich Investments
The team at Zurich Investments is a long established and highly experienced team of investment managers who manage approximately €30.2bn in investments of which pension assets amount to €23.4bn. 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 €30.2bn in investment of which pension assets amount to €23.4bn. To find out more about Zurich Life’s funds and investments, w: zurichlife.ie/funds,