Global equities were hushed on Monday as the US enjoyed its first national holiday of the year, leaving the rest of the markets to stroll through their quietest trading session of 2021. It was a sign – if one was even needed – that Europe lacks direction without the US at the helm to direct proceedings.
Lacking a US intervention, and seemingly unimpressed with data from China showing GDP grew 2.3% in 2020, European indices had a muted day all-round. It seems any pent-up momentum might be reserved for Wednesday, when President-elect Joe Biden is finally inaugurated in Washington after months of vitriol and vilification from outgoing President Donald Trump and his administration.
Global equities had a similarly subdued response to Biden’s $1.2tn economic relief plan announced last week.
With Brent Crude slipping to the wrong side of $55 – leaving BP (LON:BP) and Shell (LON:RDSA) to mull over falling shares – the FTSE lost -0.22%, down to 6,720.65 points, by the end of trading on Monday afternoon.
Meanwhile, Eurozone indices spent the day on the positive side of the spectrum, if only by a little. The DAX gained to 13,848.35 with a +0.44% increase, while the CAC clung to 5,617.27 after a meagre +0.099% climb.
As Spreadex financial analyst Connor Campbell put it: “that’s about it”.
Monday marked one of, if not the most, quiet sessions since the year began. While tomorrow is likely to be something of a write-off as well, Wednesday brings with it all the buzz and excitement of a new President, whose “blitz” of presidential decrees to undo Trump-era policies are reportedly ready to go from the moment he steps foot in the White House.
It comes as no surprise then that this week’s “star of the show”, Campbell says, is Wednesday’s inauguration.
However, as soon as Wednesday’s initial excitement is over, attention will turn to whether or not the Democrats will actually be able to implement Biden’s campaign pledges – one of which being the Covid-19 stimulus package he announced last week. It still needs to pass Congress before it can be carried out, and will be the first test of the new administration’s ability to strong-arm new policies through a “precariously balanced, if blue-tinged, Senate”.
How the Democrats perform in the coming days and weeks will set the tone for how investors feel about the Biden presidency as a whole, and will determine which direction global equities head in too.
On top of the high-stakes politics happening in D.C., there is scheduled to be a webinar appearance from Bank of England governor Andrew Bailey on Wednesday – which always has the potential to shift the UK market, for better or worse – followed by the first European Central Bank meeting of 2021 on Thursday.
Thursday also marks the next addition to a slew of increasingly alarming US jobless claims reading – in danger of hitting 1 million if it again overshoots estimates as it did last week – with Friday then rounding up the figures of January’s economic performance with the latest round of flash PMIs.
So, a slow start to the week overall, but by all means keep your seatbelts fastened for developments later on in the week.