market sentiment is being of appetite for risk. The distribution of vaccines
for covid-19, as well as the stimulus that have been launched, support positive
measures taken by governments and central banks to support economies have
encouraged investors to focus on the outlook for the next year, even if
restrictions are likely to be increased because of the virus.
continues to fall against most rivals on Monday due to strengthened optimism in
the global economic recovery this year.
The restless year of 2020 seems to be ending with optimism as compensation for all the disturbances that investors experienced during this year. The last week of the year is concentrated on all the latest positive news, which is the type of news that did not surface over the stretch of the other 51 weeks of 2020. The new relief bill saga in the United States, which lasted for several months, finally ended with the approval of Congress and the bill being signed into law by the President Donald Trump.
Just before the end of the year, not many factors are directing the markets. All the three of major U.S. stock indexes just renewed their all-time records this Monday as risk appetite has grown on great news about the long-awaited COVID-19 relief bill. This positive wave from across the pond combined with the U.K. and EU successful last-minute divorce agreement on free trade issues supported both the island and continental assets, so that the German Xetra Dax 30 and the composite Euro Stoxx indexes touched their corresponding peak values of 2020.
A new and reportedly highly infectious strain of the same obtrusive coronavirus which was discovered at the British Isles and then also found somewhere in mainland Europe, had propelled into a rather strong downside intraday market correction on Monday. The UK 100 Index on the London Stock Exchange lost 3.2% in just four hours while the composite Euro Stoxx 50 fell even more as a reaction. But both the European continental and the British stocks generally recovered during the last two trading days before Christmas, as well as the U.S.
The United Kingdom became a lead actor this Christmas week as the news about the new coronavirus strain discovered in this country sharply hit markets. Risky assets went under a sell-off in recent days as new fears over the spread of the coronavirus and the possible ineffectiveness of the vaccines which have begun to be distributed, seemed to freeze investors’ hearts. Moreover, EU-UK trade negotiations over Brexit have been unsuccessful so far and this has amplified skepticism that the deal will be reached before the final-final deadline on December 31.
On December 16, the U.S. Federal Reserve (Fed) issued a regular statement of the Federal Open Market Committee (FOMC) and shared its economic projections. The members of the Board of Governors reaffirmed their readiness to use a "full range of tools to support the U.S. economy in this challenging time", including all the necessary asset purchases, which "help foster smooth market functioning and accommodative financial conditions, thereby supporting the flow of credit to households and businesses".
Federal Reserve (Fed) and its Chairman Jerome Powell have said nothing particularly new after the Fed’s Federal Open Market Committee meeting, which was the last meeting for 2020. Hopes for a further softening of monetary policy by the Fed eventually were not fulfilled. Interest rates were kept within the range of 0-0.25% and the Fed will continue to increase its holdings of securities by $120 billion a month, disappointing those who hoped for an extension of the purchase program. The monetary policymaker will buy U.S.
It may sound weird, but the title of the article can be found on a list of shock scenarios recently published by Saxo bank. There are no substantial calculations behind its forecasts, as the purpose of the list may rather be to point out possible shocks and surprises for the global economy for the year to come. However, this shock tactic may have some reason behind it, as some of these forecasted scenarios may be actual possibilities and developments that may unfold during 2021.
One of the most intriguing scenarios suggested by Saxo Bank is the rising demand for silver.
One more attempt is happening this week to undertake a bipartisan relief package for U.S. firms and population. The amount of $908 billion was an opening offer this time, which is more than two times less than all suggestions that already failed in the course of tough pre-election fighting. Now the important deal is within reach, both Democrats and Republicans signalled. The new version of the aid program was developed by Senator Mark Warner, a Democrat from Virginia, and Susan Collins, a Republican from Maine.
Last month’s movements of gold prices are startling. After an impersonal rally this year from $1451 per troy ounce in March, the yellow metal in November lost 10% of its maximum price of $1965 per ounce to $1774, the worst monthly loss for the last four years. Did gold lose its function as a safe haven asset in November amid roaring pandemic and global economic turmoil?
Hardly. Gold maintains its safe haven status. Economic “storms” and jeopardies have eased since this spring, when investors sheltered themselves in gold instruments.