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The actions extended their Santa Claus rally with hopes that the Omicron variant won’t cause serious economic damage next year, even as the number of cases has skyrocketed around the world. The S&P 500 was up 0.85% week-over-week amid low trading volumes and low volatility (VIX down 4% to 17.2), after hitting a record high intraday of 4,809 Thursday. The Dow Jones Industrial Average gained 388 points to 36,338.30, or +1.08%. The Russell 2000 gained + 0.17%.
International equities performed in line with their US counterparts. MSCI World added + 0.78%. In Europe, the MSCI EMU jumped + 0.96%. In Asia, the Shanghai Composite rose + 0.60% while the Nikkei of Japan stalled (+ 0.03%) after three positive weeks.
Gains in almost all sectors
Unlike last week, defensive sectors such as real estate (+ 3.69%), utilities (+ 2.64%) and consumer staples (+ 2.48%) were the most big winners in the last days of December. Consumer discretionary (+ 0.42%) lagged behind as Amazon plunged -2.54%. Moreover, Tesla climbed (-0.96%) after the electric vehicle maker announced that nearly half a million cars were due for recall due to safety concerns. Information technology (+ 0.47%) and financials (+ 0.60%) also underperformed the broader market, but it was more difficult for communication services (-0.79 %), the only S&P sector in the red, pushed down by ViacomCBS (-1.30%), Google (-1.67%), Netflix (-1.90%), Twitter (-2.13% ) and Discovery (-3.60%).
Yields on treasury bills edged up
US Treasuries continued to hold firm ahead of New Year’s Eve. The 10-year T-note rate closed at + 1.52% (+ 3bp over the week). In Germany, the 10 years Bund yield followed suit, jumping 7 basis points from -0.25% to -0.18%. Likewise, the yield of the French OAT rose from + 0.12% to + 0.20%, its highest level for two months.
Corporate investment grade bonds closed in a mixed manner (-0.29% in Europe, + 0.30% in the United States). In the high yield space, the trend remained positive on both sides of the Atlantic for the fifth consecutive week (+ 0.03% in Europe, + 0.21% in the United States). Emerging debt fell by -0.34% in local currencies while the greenback weakened (dollar index down -0.89%). Elsewhere, gold extended its winning streak to a fourth week (spot price at $ 1,829.20, or + 0.65%).
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