Monthly Market Pulse: December 2020

In what is perhaps the most, and one of the few, positive headlines of 2020, Britain became the first country to license a fully tested vaccine for Covid-19. Mass vaccination commenced on Tuesday 8 December 2020 across the UK, providing hopes that by the end of 2021 the economy will be back to where it was before the pandemic struck. The news of the vaccine prompted a wave of equity market exuberance, with stock markets rallying across the board. Elsewhere, the negative economic effects of the pandemic continued to elude the UK housing market which saw a 6.5% annual house price growth in November, the highest rate in over 5 years and a continuation of its recent strength, which has led to some concerns being raised.

Chart of the month: Market capitalisation (MSCI All-Country World index, $trillion)

Source: Refinitiv, Financial Times, Blend Network

Politics

  • The UK’s medicines regulator gave its approval to the Pfizer/BioNTech jab following a rolling review process used to assess promising vaccines during a health emergency. Mass vaccination was rolled out starting from 8 December. At the time of writing, the US is expected to approve the vaccine soon and the EU by the end of December.
  • As of the time of writing, the future of Brexit hung in the balance as time ran out for a Brexit deal. As of 7 December, JPMorgan said its odds on a no-deal had risen to one third from 20% and the Pound tumbled on concerns that there would be no agreement covering annual trade worth nearly $1 trillion.

Business & Economics

  • Chancellor of the exchequer Mr Sunak produced his spending review and forecasted borrowing to reach 19% of GDP this year (£394bn), the highest deficit in peacetime.
  • Early indications suggest that Black Friday, many retailer’s last ray of hope, largely disappointed: Barclaycard figures show payments were down by 10% from last year.
  • UK economic figures continued to point to more pain ahead: the number of unemployed people aged over 50 in the UK has increased by a third in the past year.

Real Estate

  • Annual house price growth rose to 6.5% in November, the highest rate since January 2015. This comes after several month of surprisingly strong housing market performance – 5.8% YoY in October, 5% YoY in September and 3.7% YoY in August.
  • Prices were also up by 0.9% month-on-month in November. This took the year-to-date price increase during the first 11 months of the year to 3.2%, an impressive performance given the magnitude of the pandemic and ensuing economic slowdown.

Equity Markets

  • As depicted in our chart of the month, the MSCI All-Country World index was up by 12.2% in November — its best month on record — to reach new all-time highs. According to the FT, this rally has added $30 trillion in market capitalisation since the March lows and been driven by energy stocks, airlines, hotels and European banks.
  • In early-December, the FT explained how “the markets have become too hot to handle” with the prospect of a global economic recovery powering optimism despite the economic damage from Covid19. It explained that frenzied stock-buying has led many brokerages and wealth managers to struggle to keep up.

FX & Commodities

  • Following a down trend throughout the summer and early-autumn that took prices below the key $1,800 resistance level by early-November, gold prices have reversed higher since the start of November and the initial uncertainty around the US election. Despite the recent optimism around the Covid19 vaccine, the road ahead remains uncertain and the persistence of negative real interest rates, not to mention the possibility of a debt crisis, suggests that gold prices could be set for another rally.

At Blend Network, our focus remains on funding highly liquid properties in very strong pockets of the UK property market. We have had a very strong Q4 by funding £2,990,000 in the last quarter of 2020 and by repaying £194,557.08 to our lenders in Q4. Thank you for your support so far and keep an eye for new loans coming at www.blendnetwork.com

 

 

Your capital is at risk if you lend to businesses. P2P lending is not covered by the Financial Services Compensation Scheme. Investments are illiquid (the inability to sell assets quickly or without substantial loss in value). Past performance is not a reliable indicator of future results.

Blend Loan Network Limited is an Appointed Representative of Resolution Compliance Limited which is authorised and regulated by the Financial Conduct Authority (FRN. 574048)

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