08.01.2021 - Global equities rose this week as political turmoil in Washington was overshadowed by hopes for additional economic stimulus after Democrats gained effective control of the United States Senate. US averages closed at record highs on Thursday. The yield on the US 10-year note has risen 0.15% since Christmas Eve, to 1.09%, as markets have begun to price in rising inflation expectations, greater-than-anticipated fiscal stimulus and higher Treasury issuance. The price of a barrel of West Texas Intermediate crude oil rose nearly $4 to $51.65 after a large Saudi production cut. Volatility, as measured by the Cboe Volatility Index (VIX), fell 0.9 to 21.85.
MACRO NEWS
US nonfarm payrolls dropped in December Rising coronavirus case counts, the reimposition of restrictions aimed at curbing the spread of the disease and colder weather curtailing outdoor dining combined to snap a seven-month string of US job gains in December as nonfarm payrolls declined 140,000. Economists had predicted a gain of 50,000 positions. Nearly a half-million workers in the leisure and hospitality sector were displaced last month. One bright spot was a significant upward revision of November and October's figures. Analysts see the December setback as temporary, with increasing vaccine availability, pent-up demand and economic stimulus boosting economic growth later this year
Trump admits defeat, assures peaceful transition after Capitol stormed On Thursday, a day after a crowd of his supporters stormed the US Capitol, gaining entrance to the building and violently disrupting the certification of the Electoral College vote officially making former Vice President Joe Biden president, President Donald Trump conceded the election and promised a peaceful transition of power. A number of cabinet officers and high-ranking Trump administration officials have resigned since the tumult, some blaming the president for inciting attendees of a rally at the White House shortly before the riot that left five dead.
Georgia sweep gives Democrats US Senate control The anticipation of additional stimulus measures resulting from the shift of control in the US Senate following two runoff elections in Georgia helped fuel a further equity rally this week as markets largely looked past the turmoil emanating from Washington. $1,400 stimulus checks are expected early in the Biden administration while an infrastructure package is seen as a high priority for later this year. The fragile state of the economy may keep any near-term push for higher taxes on the back burner.
Chinese telecom firms to be delisted, removed from indices After a seesaw week that saw the New York Stock Exchange reverse course twice regarding the listing status of three Chinese telecom firms, the companies, China Mobile, China Telecom and China Unicom, will be delisted in the US and their stocks removed from MSCI indices on Friday. Other index providers are set to remove the shares in coming days. The move comes as the result of an executive order barring US investors from owning shares in companies that the Pentagon says support China's military and intelligence apparatuses.
QUICK HITS
British Prime Minister Boris Johnson called for a simplified regulatory regime now that that the United Kingdom has left the European Union.
China locked down Hebei province after a COVID-19 outbreak this week.
A state of emergency due to rising coronavirus case counts has been declared in Tokyo and neighboring regions.
The US suspended 25% tariffs on French goods that were due to go into effect this week in reaction to the French digital services tax that the US that says unfairly targets US tech giants. Negotiations aimed at the imposition of a global digital tax continue.
There are early indications that the mRNA vaccines already approved and being administered are effective against new coronavirus variants, Reuters reported.
Under a controversial national security law, dozens were arrested in Hong Kong this week, including four former lawmakers, sparking the condemnation of western nations.
Stay focused and diversified In any market environment, we strongly believe that investors should stay diversified across a variety of asset classes. By working closely with your investment professional, you can help ensure that your portfolio is properly diversified and that your financial plan supports your long-term goals, time horizon and tolerance for risk. Diversification does not guarantee a profit or protect against loss.
Hinweise:
The information included above as well as individual companies and/or securities mentioned should not be construed as investment advice, a recommendation to buy or sell or an indication of trading intent on behalf of any MFS product.
Securities discussed may or may not be holdings in any of the MFS funds. For a complete list of holdings for any MFS portfolio, please see the most recent annual, semiannual or quarterly report. Full holdings are also available on the individual Fund Summary tab in the Products section of mfs.com.
The views expressed in this article are those of MFS, and are subject to change at any time. No forecasts can be guaranteed.
Past performance is no guarantee of future results.
Sources: MFS research, Wall Street Journal, Financial Times, Reuters, Bloomberg News, FactSet Research, CNBC.com.
This content is directed at investment professionals only.