The U.K. Stock market
- The U.K. Stock market was slightly lower this week. Mark Carney, the outgoing Governor of the bank of England, said that higher spending by the government and more business investment are needed if the low rate of UK economic growth is to be raised. “UK interest rates”, he said are “going to be relatively low for the foreseeable future, and that adjustments to rates will be relatively modest”.
- Sajid Javid, unexpectedly resigned as chancellor and the Pound rallied on the news that he was being replaced by Rishi Sunak, who is perceived as more likely to implement fiscally expansionary policy.
- UK GDP was flat in Q4 with net exports contributing to growth, but consumption and business investment declining.
- Our Breadth indicator stayed neutral this week but our Momentum indicator ticked lower.
The U.S. Stock market
- The U.S. stock market was higher this week with technology stocks continuing their run of out-performance.
- There is more confidence about the containment of the new coronavirus but Fed chairman Jerome Powell said it was “too early to say” how the virus will affect the economy and indicated that policymakers were “closely monitoring” its spread. By the end of the week the market was pricing in a high chance of a furter rate cut this year.
- On the economic front it was reported that job openings had declined sharply in December although weekly jobless claims remain near multi-decade lows.
- Our Breadth indicator stayed neutral this week and our Momentum indicator ticked higher again.
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