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A festive holiday-shortened week for stock investors

From 20-24/12/2021

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The week leading into Christmas proved a festive one for stock investors, with most major equity markets ending the shortened week firmly higher. The U.S. market was closed on Friday (Dec. 24) in observance of the Christmas Day holiday. Several markets in Europe, including Germany, Switzerland, Poland, Greece and Romania also remained shut. Despite the ongoing concerns around inflation, and interest rates, some upbeat economic reports boosted stocks.


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AMERICAS

CANADA

The Canadian market ended the week with solid gains.

The benchmark S&P/TSX Composite index recorded its best weekly performance in two months, aided by gains in healthcare and technology stocks. Stocks got a boost by data showing that the Canadian economy grew 0.3% in November, its sixth consecutive month of expansion.

tsx

U.S.

Stock indices rebounded from the previous week’s losses.

The NASDAQ outperformed the S&P 500 and the Dow Jones by wide margins, spiking by 3.2%, the S&P 500 surged up by 2.3% and the Dow jumped by 1.7%. Traders reacted to a slew of upbeat economic reports: jobless claims remain near pre-Covid lows, durable goods orders came in well above forecasts, consumer sentiment was revised higher, and new home sales hit a seven-month high. Personal spending rose 0.6% last month versus, also meeting expectations.

LATAM

In Mexico, the IPC returned 0.90%. The Mexican economy unexpectedly shrank by 0.2% in October from the previous month,  official data showed on Friday. “Going forward, lingering supply-chain frictions, cost-push pressures, policy uncertainty, and weak business confidence are likely to weigh on the broad industrial sector for a while,” Goldman Sachs economist Alberto Ramos said in a client note.

In Brazil, the BOVESPA lost 2%. On the macro front, Brazilian GDP growth projection for 2021 dropped from 4.65% to 4.58% , in the Focus Report of the Central Bank. In labour market news, 324,112 jobs were created this November, resulting from 1,772,766 hires and 1,448,654 terminations of employment with signed portfolio. Meanwhile, foreign investment in Brazil totaled US$4.6 billion in November, up 68% from the previous month, central bank data showed.

ASIA/PACIFIC

JAPAN

Japanese shares finished the week higher.

The Nikkei 225 returned 0.83%. Heavyweight technology stocks led the gains on Friday (Dec. 24), taking cues from an overnight strong finish on Wall Street, in holiday-thinned trading. On the monetary policy front, Bank of Japan Governor Haruhiko Kuroda said on Thursday that the central bank will patiently maintain strong monetary support as inflation remains below the targets. In economic news, November consumer inflation marked the biggest year-on-year rise in nearly two years on surging fuel costs.

CHINA

Chinese equity markets were little changed.

The People’s Bank of China on Monday lowered its one-year loan prime rate (LPR) by 5 basis points to 3.8%, for the first time in 20 months, amid looming economic headwinds. A slew of recent economic indicators, including retail sales and investment growth, point to a slowing economy. The LPR affects lending rates for corporate and household loans. While Beijing’s move to lower the LPR was widely expected, it highlights China’s monetary policy divergence from other major central banks, which are set to raise interest rates. Unlike the West, Beijing had refrained from flooding the economy with stimulus packages, focusing instead on offering targeted support to smaller businesses.

AUSTRALIA

Australian markets ended firmly in positive territory.

The benchmark S&P/ASX 200 returned 1.59%. Energy stocks rose for the fourth day on Thursday (Dec. 23) on the back of an overnight surge in oil prices. WTI crude futures closed 1.42% higher at $73.79 per barrel on Thursday, finishing the week up by 4.34%. Brent crude futures eased to the mid-$76 per barrel level on Friday, after closing near $77 in the previous session.

asx200

EUROPE

EUROZONE

Major country indices moved higher over this period amid thin volumes.

Netherlands went into a period of lockdown, while tighter travel restrictions were announced in France, Germany, Austria and other countries. Data were mixed. Italy’s consumer confidence improved in December, survey results from the statistical office Istat showed on Thursday, but business morale slipped. Spain’s Q3 gross domestic product grew 2.6% sequentially, bigger than the initial estimate of 2.0%.

Germany’s import prices rose in November at the fastest pace in nearly five decades, preliminary data from Destatis showed Thursday. And Eurozone’s consumer confidence deteriorated for a third straight month in December, according to survey data from the European Commission. Nevermind the data, European markets took encouragement  from European Central Bank (ECB) President Christine Lagarde who stated on Wednesday that inflation is expected to fall over 2022. Hope dies last.

Dax

CEE/SEE

In Hungary, the benchmark BUX index plunged 2.21% over the week. The government will cap rates on mortgages at October levels for six months starting in January, Hunagrian Prime Minister Viktor Orban said. The decision hit the shares of OTP Bank Nyrt, the country’s biggest lender, which fell more than 6% on Wednesday, the most in more than a year, dragging down the BUX as much as 3%.

In Romania, the BET index gained 0.91%. In currencies, financial analysts see the Romanian leu depreciating to an average of 5.1145 units to the euro within the next 12 months, while they expect inflation to average 5.8% during the same period, a monthly poll by CFA Romania showed on Monday (Dec. 20).

REST OF EUROPE

In Russia, the MOEX index fell 0.55%. The Moscow Exchange has boosted its international shares offering to over 600 stocks while in 2022, the number of international securities available for trading on MOEX will exceed 1,500. Next week, futures contracts on euro exchange rates will begin trading on the MOEX Derivatives Market.

In the U.K., London’s premier index added 1.41%. The UK’s GDP grew 1.1% on quarter in the three months to September of 2021, instead of 1.3% estimated on November 11 and easing from a downwardly revised 5.4% advance in the previous period,  according to the country’s Office for National Statistics.

In Switzerland, the SMI advanced 0.55% over the holiday-shortened week. The Swiss stock market closed on a firm note on Thursday (Dec. 23), its last trading day before the Christmas holiday, extending recent gains.

MIDDLE EAST

(Note: Trading 19-23/12/2021 expect Turkey)

In Israel, trading in the Tel Aviv Stock Exchange (TASE) over the week was marked by increases in the leading share indices. The TA-35 index increased 2.0% over the week, bringing year-to-date cumulative gains to 30.0%. On the macro front, the rate of unemployment excluding those temporarily absent from work, decreased slightly from about 5.2% in October 2021, to about 4.6% in November 2021, CBS figures showed.

In Turkey, stocks as measured by the BIST100 index sank 9.27%. President Recep Tayyip Erdogan revealed an emergency plan to support the lira and protect local deposits against market moves. Following the news, the currency rocketed Monday in the biggest rally since 1983.  Prior to the recent rebound, the lira had lost about half of its value against the U.S. dollar since September

AFRICA

In South Africa, Johannesburg’s Top40 index closed up 0.53%. On the macro front,
economists surveyed by Bloomberg predict gross domestic product will expand 4.9% in 2021 in Africa’s most industrialised economy compared with a previous estimate of 5.1%,  by 2% next year and 2.1% in 2023.

In Nigeria, the NSE20 returned -0.21%. Nigerian stocks are currently up 4.95% YTD but -2.2% month to date. If stocks close negative this month then that will be the only second time this has happened in the last 10 years, according to Nairametrics.

In Kenya, the NSE20 jumped 2.56%. This week the Nairobi Securities Exchange (NSE) made a voluntary commitment to become a signatory of the Sustainable Stock Exchange (SSE)’s derivatives exchanges network to further the sustainability of financial markets.


Content Disclaimer:

This page has been prepared for informational purposes only. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument.


For any comments, suggestions or corrections email: kbalkoudi@worldmarketsdaily.com
Kyriaki Balkoudi is a markets editor for World Markets Daily. She has a bachelor’s degree in Balkans Studies from Aristotle University of Thessaloniki, Greece and a master’s degree in International Politics from City University London, UK.


References:
“Global Markets Weekly Update”. T. Rowe Price. Dec. 23, 2021
“Weekly market wrap”. Edward Jones. Dec. 23, 2021
“Weekly Market Recap”. John Hancock Investments. Dec. 23, 2021
“Schwab Market Update”. Charles Schwab. Dec. 22, 2021


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