Market Monitor - 26 November 2021
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Market Monitor – 26 November 2021

It has been another mixed week for global stock markets, with gains in the UK and United States offset by losses in Europe and Asia. The news for investors has again been dominated by concerns over tightening monetary policy and the threat of tighter Covid restrictions coming into force over the winter months.
Meanwhile, oil prices have resumed their upward progress, and the impact of rising inflation continues to restrict growth in the world’s biggest economies.

The US

On Wall Street, the Dow Jones Industrial Average ended trading on Wednesday – ahead of the Thanksgiving holiday – 0.6% up, with the S&P 500 edging 0.1% ahead. US markets welcomed the news on Monday that President Joe Biden had decided to extend the term of Federal Reserve chair Jerome Powell for a further four years. Investors appeared to take the view that sticking with Powell – a known quantity – is preferable to bringing in a successor who might have more hawkish views on interest rates and stimulus withdrawal.
However, minutes from the most recent Fed meeting published on Wednesday confirmed that US rates are almost certain to rise in 2022, while officials suggested that stimulus measures could be wound up sooner than expected –news that sent technology in particular stocks lower.

The UK & Europe

In the UK, the FTSE 100 closed on Thursday 1.2% up for the week, with gains based on rises in crude as well as a weakening of the pound. Among the large number of companies with international earnings on the FTSE, falls in sterling typically translate directly into higher share prices.
The pound has lost almost 2 cents in value against the US dollar over the course of the past week thanks to a worsening economic situation in the UK and the prospect of higher interest rates on the other side of the Atlantic. Meanwhile, Bank of England governor Andrew Bailey cast doubt on a possible December UK interest rate rise, saying that tighter monetary policy was unlikely to address the supply-side problems that are currently the main cause of rising inflation.
The picture over the past few days has been considerably gloomier in Europe. In Frankfurt, the DAX index ended Thursday’s session down 1.5% for the week, while France’s CAC 40 lost 0.5%. A surge in coronavirus cases in Germany has raised the possibility that new restrictions will need to be imposed before Christmas – indeed, a national lockdown is already in place in neighbouring Austria.
Revised figures showed that the German economy grew more slowly than previously thought between July and September, and the Bundesbank warned on Monday that inflation in Germany could hit 6% this month. Meanwhile, the European Central Bank appears to be increasingly open to raising interest rates, according to comments made by two senior officials.

Asia

In Asia, the Hang Seng index in Hong Kong lost 1.2% thanks to the ongoing fallout from the Evergrande crisis and sharp falls in the global technology sector. Japan’s Nikkei 225 index of leading shares closed trading on Thursday down 0.8% for the week so far on the back of renewed Covid fears.
November 19
November 25
Change (%)
FTSE 100
7223.6
7310.4
1.2
FTSE All-share
4135.1
4167.3
0.8
S&P 500
4698.0
4701.5
0.1
Dow Jones
35602.0
35804.4
0.6
DAX
16160.0
15918.0
-1.5
CAC 40
7112.3
7075.9
-0.5
ACWI
754.9
750.3
-0.6
Hong Kong Hang Seng
25050.0
24740.2
-1.2
Nikkei 225
29745.9
29499.3
-0.8

Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 25/11/2021.

26 November 2021
Mark King
Head of Investment Content
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Market Monitor – 26 November 2021

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