Monthly Market Pulse: January 2021

Prime Minister Mr Johnson addressed the nation on 4 January to announce a tier-5 lockdown affecting all of England. The move followed the discovery of a new coronavirus mutation spreading rapidly in southeast England that according to medical sources is up to 70% more transmissible than other variants. However, as opposed to the first lockdown in March and April last year, the housing market has remained open for business during this new lockdown. Consequently, people in England have remained able to move homes and removal firms, tradespeople and estate agents have been able to operate by going inside homes.

Chart of the month: UK GDP, Q1 2020 to Q3 2020

Source: Office for National Statistics – GDP first quarterly estimate, Blend Network

Politics

  • On 6 January, ‘Black Wednesday’, a mob of supporters of US President Donald Trump, gathered to protest the certification of the November 3 presidential election results and the victory of Joe Biden, stormed the US Capitol. The images shocked the world in what will go down as a bleak day in the history of US democracy.
  • Following a 47-year union of mutual distrust, the UK’s divorce from Europe was sealed. ‘Britain has lost the EU. Can it find a role?’, titled The Economist on 2 January.
  • Britain was once again put in lockdown as cases and deaths from Covid-19 soared. Schools shut down a day after the Prime Minister insisted they were safe. London mayor Sadiq Khan declared a major incident in London as cases continued to soar.

Business & Economics

  • The World Bank estimated that the world economy will grow by 4% in 2021. It thinks China’s GDP will expand by 7.9% and America’s and the Euro Area’s by around 3.5%.
  • The UK economy saw a partial recovery in Q3 and while Q4 GDP data has not yet been released, the Bank of England expects it to have contracted by a little over 1% in Q4.

Real Estate

  • In contrast to the first Covid-19 lockdown in March and April last year, the housing market has remained open for business during this new lockdown. Consequently, people in England have remained able to move homes and removal firms, tradespeople and estate agents have been able to operate by going inside homes.
  • UK annual house price growth continued to post multi-year record highs, ending 2020 at a six-year high of 7.3% growth year-on-year, the highest rate since November 2014. According to the Nationwide House Price Index, UK house prices were up by an average of 5% year-on-year every single month between July and December last year.
  • East Midlands saw an 8.6% year-on-year house price growth in Q4 2020. East and West Midlands have seen close to 25% house price increase since the Brexit Referendum.

Equity Markets

  • Despite Covid-19, global stocks started 2021 on a high. The FTSE 100 jumped by more than 6% in the first week of the year on the wake of President Joe Biden inauguration and hopes that vaccines will end the lockdowns. As of the first week of January, the MSCI World Index of developed market shares stood 10% above its pre-crisis peak.
  • But analysts have started to warn of a sharp market correction. Jeremy Grantham, the British co-founder of investment firm GMO, talked of “a fully-fledged epic bubble”.

FX & Commodities

  • Saudi Arabia said it would cut its oil output by an extra 1m barrels a day in February and March, a decision it took unilaterally to counteract Russia’s smaller increase in production. Oil prices soared, pushing Brent crude to above $54 a barrel for the first time since March.

At Blend Network, we ended 2020 on a high note: the value of our loans listed were up by 104% compared to 2019. We have also kick-started a very busy year and welcome the Government’s move to keep the housing market open during the UK’s third national lockdown. So, keep an eye on www.blendnetwork.com as we have many loans coming soon that you won’t want to miss.

 

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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