Weekly Market View through 29th January 2021

Weekly Market View through 29th January 2021

UK Stock-Market

  • The UK stock-market followed the US market lower last week with concerns increasing that economic recovery could slow due to the spread of coronavirus.
  • On Tuesday, the IMF raised its forecast for global economic growth and now expects an expansion of 5.5% this year. The outlook for growth in Europe was lowered. Gita Gopinath, the IMF’s Chief Economist, posted that “there remains tremendous uncertainty and prospects vary greatly across countries”, and “much now depends on the outcome of this race between a mutating virus and vaccines to end the pandemic, and on the ability of policies to provide effective support until that happens”.
  • On a more positive note, trials show that the coronavirus vaccine from Novavax is 89.3% effective and nearly as effective when trialled against the new UK variant.
  • The row between the European Union and Astrazencea continued with the EU saying it would restrict export of vaccines unless the drug maker committed to its promised supply. The situation seems to have calmed heading into this week with the EU reversing its decision and AstraZeneca announcing it will deliver a further nine million doses of its vaccine to the EU in the first quarter.
  • Our Breadth indicator turned neutral this week and our Momentum Indicator, although still positive, turned down.

UK Market 29th January 2021

US Stock-Market

  • The US stock-market was lower last week with Wednesday being the worst day for the market in three months with the highest trading volume for a single day since 2007.
  • The decline was largely triggered by a wave of speculative trading from private investors who bought heavily shorted stocks such as GameStop en-masse. This applied a massive short-squeeze on hedge funds who were forced into selling longs to raise cash. Brokers such as Robinhood, in a much criticised move, introduced trading limitations on Thursday to prevent the activity. How this develops and how much more of an impact it will have remains to be seen.
  • Earnings season is underway with tech giants Apple and Facebook reporting last week. Facebook said there was “significant uncertainty” in the outlook for this year.
  • The Fed left its policy and QE program unchanged. Fed Chair Jerome Powell asserted that their policy would be to continue providing support while the pandemic continued and until “substantial further progress” was made towards its targets.
  • Over the weekend, ten Republican senators have written to President Joe Biden asking him to scale back his $1.9 trillion additional stimulus measures in favour of an alternative plan they say will win wide support.
  • Our Market Breadth Indicator turned neutral this week but our Price Momentum Indicator remained positive.

US Market 29th January 2021

The Big Picture 29th January 2021

Market Sentiment 29th January 2021

U.S. Risk Barometer 29th January 2021

Europe Risk Barometer 29th January 2021

Disclaimer: ‘Where the business has expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. The information contained within this communication is believed to be reliable but Realm Investment Management Limited does not warrant its completeness or accuracy.

This communication is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell investments.

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