Is It Already Game, Set and Mattress(?) For 2021:

We know no one wants to, but it might be appropriate to start by looking back to 2020. At the start of January last year, we were looking ahead to Brexit – that would surely dominate the headlines? If not, then the gradual thawing of US/China trade relations almost probably would. Well, China certainly did manage to grab the headlines… but not for trade reasons. By the end of January 2020, the world was experiencing the initial impact of coronavirus, and global stock markets were starting to react. It was never going to bode well for  2021!

Ultimately (and thankfully!) 2020 was a year like no other. But, as we reported last month, most stock markets made gains in the year.  So, what news of 2021 so far? As mass vaccinations got underway, there was finally hope of an end to the pandemic (mutations permitting). But there was also continued gloom for the UK high street and for the American jobs market. Nor was January a great month for world stock markets but, as last year very clearly showed, it is but one month.  As always, let’s delve in!

UK

By the end of January, around 600,000 people were reported as being vaccinated in one day. It was a huge achievement, especially in a month that began with business leaders calling for help amidst the country’s third lockdown, which is now set to last until March (at least). By then, the Chancellor will have delivered his next Budget. There are hopes that the furlough scheme will be extended, but the big question is ‘what other help will there be for businesses?’ 

In the past, Rishi Sunak has pointed out that he cannot save every business, nor every job. And that second part of that statement is becoming all too apparent. Asos have recently confirmed they are buying the Topshop and Miss Selfridge brands. While they are interested in buying the brands and the customer base, they do not want the physical stores. And they’re not alone! Last week Debenhams was bought out by Boohoo on exactly the same proviso. So, when the Chancellor presents his next Budget, there will be high hopes of more than just a reduction in rates, or an online sales tax. 

In the wider economy, UK GDP fell by 2.6% in November, courtesy of a second lockdown. Due to a rise in transport costs, inflation doubled in December to 0.6%, and Government borrowing in December set a new record high of £34.1bn.  Thankfully, it wasn’t all doom and gloom though. Bank of England boss; Andrew Bailey; announced he expects a ‘pronounced recovery’ as the vaccination roll-out continues. Then came the news that over 29,000 new companies were registered in the UK in September.  Where did all of this leave the FTSE-100 index of leading shares for January 2021? Sadly it dropped 1%.   

Europe

January in Europe began with shareholders approving the merger between Fiat Chrysler and France’s PSA group. Together they will form the world’s fourth-biggest carmaker.  It was also an exciting start to the new year for Europe’s police forces, Europol. They led an international operation that took down what is purportedly the world’s largest illegal platform on the ‘dark web.’ With more than 2,400 people selling drugs, anonymous sim cards, and counterfeit money; the bust toppled the Dark Market empire that was worth over €140m (£124m). 

Elsewhere in Europe, Italian Prime Minister Giuseppe Conte resigned amidst criticism of his handling of the pandemic. While almost half of the Italian voters want Conte to remain as PM, political parties remain divided overspending as a way out of the consequent economic downturn.  The German and French indices were both down in January. Germany’s DAX index fell by 2%, while the French stock market dropped 3%. 

US

Of course, the start of 2021 marked Joe Biden’s inauguration as the 46th President of the United States.  He immediately set about unpicking as much of Trump’s legislation as time would permit. So, the US will rejoin the Paris Climate Accord, and 11m illegal immigrants were granted an amnesty forthwith.  In other US news, January saw a change at the top of the billionaire leaderboard. The soaring share price of Tesla saw Elon Musk finally overtake Amazon’s Jeff Bezos for the ‘world’s richest man’ title (a title which has since switched back).  Musk’s Tesla is not only now the world’s most valuable car company, but it also set a record for the delivery of new vehicles. 

In other business news, Apple reported sales of $111bn for the fourth quarter – a staggering 21% up on prior year! Facebook also saw revenue growth to the tune of $28bn in the fourth quarter (25% up on last year’s numbers), and Netflix finally surpassed 200m subscribers.  …But alas, the news was bleak for the wider US economy which lost 140,000 jobs in December. It came as rising Covid-19 cases, and the bleak weather took their toll.  Overall, the Dow Jones index dropped 2% to end the month at 29,983. The more broadly-based S&P 500 index fell 1%. 

Far East

Much to the world’s collective chagrin, official figures showed that the Chinese economy grew by 2.3% in 2020. While this may be it’s slowest rate of growth, China remains the only major economy to have grown at all last year.  January began with more pro-democracy unrest in Hong kong. It ended on a similarly bellicose note too. Beijing warned Taiwan that any attempt to seek independence would be tantamount to a declaration of war. 

During Trump’s final days of presidency, the US/China feud rumbled on. China introduced new legislation to enable courts to punish firms that comply with ‘unjustified’ foreign laws. The US retorted with accusations of China falling short on its commitment to buy an extra $200bn of US goods in 2020 and 2021.  Tellingly, the United Nations figures show that China overtook the US as the world’s top destination for foreign investment in 2020. The US saw new investments halved last year, whilst direct investment into China grew by 4%.

The Shanghai Composite index was up just 10 points, and remained unchanged in percentage terms. The Hong Kong market grew 4%, closing January at 28,284; while South Korea’s market increased 4%. Japan’s Nikkei Dow index rose 1%. 

Emerging Markets

January marked interesting times for Vladimir Putin and his arch-critic Alexei Navalny. Following his alleged poisoning with a military-grade nerve agent, Navalny was immediately arrested, along with some 1,500 supporters who took to the streets in protest. Rumours also continue to swirl around Putin’s health. So all of the indications currently point to 2021 being an eventful year for Russia.

The Russian stock market remained unperturbed by the unrest and speculation. It dropped just 12 points in the month to end unchanged in percentage terms.  There was bad news in Brazil. Ford announced the closure of its last three factories in the country, putting an end to decades of manufacturing in the region. 5,000 people are expected to lose their jobs as a result. 

And finally

With millions of children facing the ordeal of Zoom lessons with their teachers and, presumably, tiresome questions, one boy managed to avoid the interrogation. The young whippersnapper changed his name to ‘Reconnecting’. Apparently, it took his teacher several weeks to twig that he’d been on radio silence for more than a while… 

Speaking of ‘radio silence,’ – that’s almost certainly what guests at certain Australian hotels would like. The world’s elite tennis players were flying down under for the Australian Open tennis, only to be quarantined in their hotels for 14 days. Obviously, they still needed to practice, so several of the players took to training in their bedrooms. We have all had noisy neighbours in the next bedroom, but 400 backhand volleys hitting the wall would undoubtedly leave us wondering what the ‘deuce?’ Never was there such a clear case of game, set and mattress… And on that note, we shall draw our January 2021 commentary to a timely close! So, until next time, keep looking after yourselves, and stay safe!