Daily Market Commentary 29th December 2020

Markets experienced a post-Christmas rally on the back of President Trump signing the enormous bailout package. This was combined with another Government funding bill, to total over USD$2.3 Trillion! This is in addition to further legislation promised for bailout money of up to USD$2,000 per person. The helicopter money is coming thick and fast. Markets appreciated the fiscal stimulus and equities rallied strongly.

The EUR jumped back above 1.2200, while the GBP crashed back to 1.3450, from the highs pre-Christmas. The EU/UK post-Brexit trade deal sparked a spike in the GBP, following the announcement just prior to Christmas, but the reality was not enough to support the currency. It appears to be a great deal, although there remains criticisms, although it should enable the UK to open up massive potential trade deals across the globe. The British Government have already signed many and now look to the mother of all deals, the USA.

The coronavirus remains an issue, as lockdowns continue across Europe and parts of the US. Political events will come into focus over the next month as the US moves into a transition, to the new administration. This will not be a smooth handover and it may well have implications for markets.