Wall Street’s performance indicative of bull market
- Top indices finished November with excellent monthly performances.
- The DJ30 had its best month since 1987(!) and the SPX500 and NASDAQ100 registered their best single-month gains since April of this year.
- Furthermore, all three major indices registered new all-time highs last month.
- From a statistical standpoint, months with a +10% return are often a sign of the start of a bull market and December is traditionally positive in electoral years.
- However, markets could always show a correction, especially when taking into account how unpredictable 2020 has been.
Oil rises on OPEC decision
- Oil prices have ticked up again on Friday following Thursday’s OPEC meeting, in which a modest production increase of 500,000 bpd was agreed upon.
- Whilst oil demand is not back at pre-pandemic levels just yet it does show some optimism for recovery.
Will UK markets recover in 2021?
- The FTSE has lagged behind its US counterparts, partly down to the fact it is heavily weighted in financials and commodities which have been more beaten down than other sectors. BP and Shell alone make up over 8% of the FTSE weight and oil demand may not pick up fully until H2 2021.
- Additionally, banking makes up almost 9% with some projections predicting recovery through 2021 and 2022.
- AstraZeneca makes up over 7% of the weight and while they have promised to sell their coronavirus vaccine at cost next year, it still may prove to be a money-spinner if it turns out regular inoculations are needed if Covid resurfaces.
- All of these may point to a turnaround for the FTSE index as a whole, and Goldman Sachs weighed in on this last week by saying they are bullish on the UK, both stocks and GBP, expecting a last-minute Brexit deal being signed and expecting UK GDP to bounce back by 7.1% next year
Bitcoin reaches new all-time high
- The long-awaited milestone was finally reached, as Bitcoin’s price hit a fresh all-time high on some exchanges last Tuesday, trading above $19,800.
- That being said, right now there is a huge sell wall at $20,000, so it might not be easy for Bitcoin to pass this next level.
- In other crypto news, Ethereum successfully completed the first phase of transitioning to Ethereum 2.0, which also offered steam for the bullish momentum seen in crypto markets last week.
The Week Ahead
- ECB rate statement and press conference (Thursday)
- FDA meets to discuss Pfizer’s coronavirus vaccine (Thursday)
Written by a team of experienced financial analysts at eToro.
This content is for information and educational purposes only and should not be considered investment advice or an investment recommendation. Past performance is not an indication of future results.