Weekly recap 4-8 January 2021

USA

The Capitol invasion, the biggest event this week, was ignored by the majority of investors. Most probably thanks to the fact that most people knew that this invasion was not going to yield any result, apart from a momentary disturbance.

Having said that, the perspectives for a new fiscal stimulus are looking better. Especially considering the Democrats now control both the Congress and the Senate. That fact elevated investors sentiment, so much that the major stock market indexes reached new historic highs.

This last week, the pandemic has taken the back seat. Not because it’s slowing down, quite the contrary, the number of infections hasn’t stopped increasing, more and more hospitals are reaching their ICU capacity already. The problem is that the vaccination program might be giving investors a false sense of security.

Europe

Even though the COVID-19 problem is getting worse by the day in Europe, investors also chose to ignore this issue. The UK imposed new lockdown measures, with a third lockdown that might last until March. Both France and Germany followed tightening their quarantine measures.

Instead, the focus went to the USA, where the expectations for a new fiscal stimulus coming from the new American Government is giving the market high hopes. Also, new and better than expected economic data coming from Germany, improved the sentiment even more.

Asia

Japan’s Prime Minister Suga declared a state of emergency in Tokyo and in the surrounding prefectures. By doing so, he’s hoping it might slow down the spread of COVID-19. That being said, it’s noteworthy that most measures are suggestions and not mandatory, in hopes of creating as little damage possible to the economy.

The continued tension between China and the USA is still the main topic, with the USA threatening to add more companies like Alibaba and Tencent to the blacklist. However, economists are expecting China to make a recovery of 8 to 9% this year, which is entirely possible considering China’s recovery.

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