Market update – 20th January 2021

20th January 2021

We have had a lacklustre start to the week thanks to the US markets being closed on Monday (18 January 2021) for Martin Luther King Jr. Day, coupled with Joe Biden’s inauguration as President today – although an inauguration isn’t normally a market moving event, given the potential for protests across America, it is getting a lot more attention than usual.

With the exception of yesterday’s Chinese GDP and industrial production data and this morning’s UK CPI inflation, economic data releases have been scant as this week’s most important releases are towards the back end of the week.

This week’s economic data from China clearly demonstrates how quickly economies can recover from the coronavirus.  Not only did the country’s GDP climb 6.5% during the final quarter of 2020 (which is similar to its pre-coronavirus growth levels), but its economy actually ended the year 2.3% larger than it started, while industrial production gained 7.3%.  A classic V-shaped recovery!

In the UK, CPI inflation rose to 0.6% in December from 0.3% in November.  Although this appears to be a sharp rise, inflation certainly isn’t running away and remains well below the BoE’s 2% target.  Additionally, much of the increase came from clothing (where prices weren’t discounted as much as they were compared with December 2019) and higher transport costs thanks to higher petrol pump prices.

Investment Management Team