Advanced Share Registry : Market News 25 Jan 2021

Anticipation for fat Mega-Tech Earnings results this week made the NASDAQ the only major index to make gains on Friday and 4.2% for the week. After loitering for several months while vaccine optimism supported cyclical and small caps, last weeks outsized result from Netflix was a wake-up call; Profitability matters. Facebooks Amazon, Apple and Google, averaged more than +8% as they played catch up to the streaming services 13% rerate. Analysts expect the big five to beat their S&P 500 counterparts on profit growth for a 12th straight quarter. IBM and Intel produced the largest drag on the Dow Jones Industrial Average with 9.6% and 8.5% losses.

Treasury yields retreating also energises money back into faster-growing companies as a robust economy- rising yields- makes them look less attractive on a valuation basis. Fed Chairman Jerome Powell will head a Committee Meeting this week and likely maintain the critical Bond Buying program subduing those very yields.

Progress combating Covid-19 is and will remain the key focus for markets. With the U.S. nearly hitting one million shots a day while the world's delivered 63 million at 3.21million/ day the numbers give enormous impetus for the reflation story. There are emerging challenges though with Dr Fauci cautioning that vaccines could be less effective with new strains of Covid-19. At the same time, Boris Johnson added, their strain could also be deadlier. These variants or other threats may provide the impetus for markets to correct one day.

Analysts at RBC Capital found that since the 1990s, the S&P 500s performance in recessions occurred in three phases: recovery, consolidation, and a second rebound. The first rally lasts an average of 10 months, with an aggregate return of 48%. Consolidation then takes two to seven months for declines around 17%, followed by another rally that saw stocks gain an average of 19%. This rally from March has lasted about ten months for returns over 71%.

While painless passage of President Joe Bidens stimulus is anticipated, the GOP is still throwing spanners into the works. Senate Majority Leader Chuck Schumer has rejected Republicans' hypocritical demands to preserve filibusters, which would allow their minority party to kill legislation. The Senate is split evenly, at 50-50 with Vice President Kamala Harris' tie-breaking vote offering control of the Senate. McConnell has parried and threatened to filibuster the Organizing Resolution which allows Democrats to assume Committee Chair positions- such is the complexity of Washington's legislative maze.

Covid-19 cases in Beijing have pushed the Chinese government to do what the world wished they'd done last year. They've urged people against travelling for February's Lunar New Year holiday which is better than nothing but still a long way from ideal. Known U.S. infections exceeded twenty-five million or about 8% of the population last week. However, the 0.7% increase is less than the average of the preceding seven days in a hopeful sign for a turning point there. The 3,390 deaths were also the lowest increase on a Saturday in three weeks. That's still double India's fatalities which has world's second-most infections.

Dow Jones	-179.03	-12.37	-0.6%
US S&P500	3841.47	-11.6	-0.3%
US Nasdaq	13543.06	+12.147	+0.1%
UK FTSE	6695.07	-20.35	-0.3%
German Dax	13873.97	-32.7	-0.2%
Gold Futures ($US/oz)	1856.20	-9.70	-0.5%
Spot Iron Ore ($US/t)	168.60	-1.95	-1.1%

The STOXX 600 in Europe index lost 0.6% but grew 0.2% for the week as France considers another lockdown to prevent Britain's potentially deadlier strain taking hold. Fatalities in Portugal surged to a record while the U.K. reported its lowest daily tally since Dec. 19, with a still massive 30,004 new cases, below the 37,000 average from the last week. Their January PMI also revealed the sharpest drop in business activity since last May amid as the third national lockdown bites hard. Travel and leisure stocks led STOXX losses, down 2.5% as business activity for the region declined to a two-month low in January. Markit's flash composite PMI remains in contraction as the manufacturing and services measure dropped to 47.5 January from 49.1 in December. Aussie markets are eying an 18 point rise for the open ahead of the national holiday tomorrow.

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