The news of Biden’s fiscal package pushes US equities to a new high!
US equities hit another record high on Monday. Janet Yellen, US Treasury secretary and former chair of the Federal Reserve, urged politicians to pass President Biden’s $1.9 trillion fiscal stimulus package. Against those who fear the package could be wildly inflationary, Yellen contended that today’s most significant economic threat isn’t doing enough to help small businesses and the jobless. Investor confidence was boosted by reported coronavirus infections from the US declining to a three-month low, with over 100,000 daily instances being reported.
Australian equities fall as the state of Victoria enters its third lockdown.
On Friday, European equities were up 0.5%, matched by UK equities as of noon in London. US equities rose 0.8% over the week, with US technology stocks climbing 1.2%. The Japanese stock market rose to its highest since 1991, rising 2.3% over the week. Despite all that, Australian equities fell 0.5%, despite positive earnings results. The sentiment was knocked by the news that the Australian state of Victoria was entering its 3rd lockdown to counter an outbreak of the UK coronavirus strain.
Thanks to the rise in the price of raw materials, the price of goods leaving Chinese factories rose for the first time since the coronavirus outbreak. This caused the Emerging markets to rise over 2.3%, with Chinese domestic equities rising by 4.5%.
Developed market government bond yields were broadly flat over the week, with 10-year US Treasury yields currently trading at a yield of 1.15%, German Bunds -0.45%, and UK Gilts 0.49%.
Gold is currently trading at $1,1817 an ounce, a rise of just 0.2%. And thanks to Saudi Arabia continuing to control supply, Brent crude traded above $60 a barrel for the first time since January 2020,
UK economic output in 2020 collapsed by over twice that of the global financial crisis of 2008/09
The UK published data showing that economic output had fallen by 9.9% last year. This is the most significant drop in three hundred years and is more than twice the pain experienced during the global financial crisis of 2008/09. However, the market did figure out how to grow more than expected in the fourth quarter, despite the reintroduction of lockdown, rising by 1% versus forecasts of 0.5 percent. The output decline over last year was double that of Germany’s and three times that of the united states. Much of this reflects the UK’s reliance on the service sector that’s been disproportionately hit by lockdowns. With the rollout of the vaccine program in the UK going comparatively well compared to other economies, all things being equal, the UK economy ought to point to a healthy recovery as constraints are lifted.
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