Economic data releases have been light so far this week given a number of markets have been closed (for example, the US was closed on Monday for President’s Day, while a number of east Asian markets have been closed for the Lunar New Year).
Global equity markets continue to move higher given the potential reflation of the global economy – no doubt helped by the $1.9tr US fiscal stimulus package that is currently working its way through Congress, coupled with the better-than-expected company result session and the rapid rollout of coronavirus vaccines.
Global equity markets have renewed their upward momentum this week after last week’s social media frenzy-induced volatility dissipated and allowed markets to focus again on Joe Biden’s fiscal stimulus plans and the global economic recovery.
It has been a tough start to the week for global equity markets given some US senators appear reluctant to pass Joe Biden’s $1.9tr fiscal stimulus package, coupled with the slow vaccine roll-out across Europe.
We have had a lacklustre start to the week thanks to the US markets being closed on Monday (18 January 2021) for Martin Luther King Jr. Day, coupled with Joe Biden’s inauguration as President today – although an inauguration isn’t normally a market moving event, given the potential for protests across America, it is getting a lot more attention than usual.
As it has been a quiet week so far on the economic data front, we thought we would address the issue which has recently appeared in many of the business pages of the press: are equity markets in a bubble that is about to burst?
In the words of the Von Trapp children in the Sound of Music, “So long, farewell, auf Wiedersehen, goodbye.”
Not only have global equity markets started the year in an exuberant mood, but the FTSE-100 has literally leapt out of the starter gates this week (as we write, the FTSE-100 is up just over 3% today, taking its gain so far this week to 5.50%).
Given the lack of any significant economic data releases so far this week, global equity markets have been fairly muted and remain hostage to the tug of war between vaccine optimism and further stimulus versus the growing number of coronavirus cases that is still being fought.
Although November ended on a downer as the FTSE-100 fell just over 100 points (nearly 1.6%) on Monday (30 November 2020), overall November delivered some fantastic equity market rallies: the FTSE-100 rose 12.35%, while in the US the Dow Jones climbed 11.84% and Japan’s Topix ended the month 11.12% higher.
