December 29. What awaits European stock market after Brexit? Experts predict that the European financial market will face big changes after the UK's final exit from the European Union in 2021. The fact is that after Brexit, euro-denominated assets (stocks and derivatives) will be withdrawn from London exchanges, and the long-term consequences of such changes are not yet clear. The trade agreement between London and Brussels last week does not cover the financial sector. This means that UK access to EU financial markets will end on December 31st. And the consequences of this can be seen already on January 4, the first day of trading in the new year. Analysts also note that the EU wants to reduce its dependence on London for financial services and increase the volume of trading in euro assets in Frankfurt, Paris, Amsterdam and other financial centers of continental Europe. As a result, the European stock and bond markets will split up, which could result in higher tariffs for investors. From January 4, EU banks will carry out operations only on the territory of the block and will abandon British platforms (Cboe Europe, Aquis Exchange, Turquoise and Goldman Sachs). According to David Hewson, President of Cboe Europe, virtually all cross-border transactions in European stocks will move to other sites in one day, which will be the largest shift in stock trading in the last two decades.
December 31. Senate Republicans blocked bill to increase payments to Americans Republicans in the Senate have blocked a bill passed by the House of Representatives to increase the amount of incentive payments during the coronavirus pandemic from $600 to $2 thousand. The head of the Republican majority in the US Senate, Mitch McConnell, said that he did not welcome the intention «to throw more borrowed money into the hands of rich Democratic friends who do not need help anyway.» Other demands of Donald Trump, in the form of an investigation of alleged violations in the presidential elections and establishing the responsibility of social networks for publishing content, the Democrats refused to discuss at all. We recall that on Monday, the House of Representatives of the US Congress approved an increase in stimulus payments requested by President Donald Trump from $600 to $2 thousand. A day earlier, Trump signed the country's budget for the 2021st fiscal year in the amount of $2.3 trillion. The budget includes a $900 billion package of measures to support the economy in a pandemic.
January 04. Bitcoin kicks off the year with a new all-time high On Monday, the value of bitcoin began to decline after renewing its historical high at $34,543 on Sunday. The current value of the cryptocurrency is $31.632. In the morning, the price dropped to $29,000. The bitcoin rate began to grow in mid-December, quickly breaking first the 20,000 mark, and then the 30,000 mark. Analysts do not agree on the future price dynamics. Some believe that Bitcoin has already reached its maximum values, and a price pullback will soon follow. Others predict growth throughout the year, and even maximum values of $100,000. Recall that the cryptocurrency is based on a decentralized system based on blockchain technology. New blocks of the system are created by its participants using computing devices, mainly video cards. However, the emission is limited by the creators: only 21 million bitcoins can exist, and now more than 19 million have already been created.
January 05. Experts named the key risks of 2021 Analysts of the consulting company Eurasia Group named the main risks for the economy, international politics and states in general, which they may face in 2021. The first line in the ranking of the top 10 risks is occupied by the «divided America». Experts suggest that a huge part of the US population will consider the head of state illegitimate. For example, incumbent President Donald Trump's refusal to acknowledge presidential election results is a unique case in US history that signals a strong internal division in America. The second risk is, of course, the coronavirus pandemic. Its further development threatens not only the lives and health of people, but also political stability and the world economy. Moreover, the distribution of vaccines can lead to the division of populations and states into haves and have-nots. The third place in the ranking is taken by the fight against climate change. According to experts, global cooperation in this area can be replaced by competition. In addition to these three points, the list of risks for 2021 includes growing tensions between China and the United States, difficulties with the international transfer of information and the likelihood of a conflict in cyberspace. Analysts also note the problems in the economies of Turkey and the Middle East, potential political risks in Germany associated with the resignation of Chancellor Angela Merkel, as well as the political crisis in Latin America.
January 06. Trump bans transactions with Chinese payment services US President Donald Trump signed a decree banning financial transactions with Chinese companies. The list of these companies includes corporations that control and develop applications for eight payment systems. In particular, the ban included: Alipay, owned by Jack Ma's Ant Group, WeChat Pay, CamScanner, QQ Wallet, SHAREit, Tencent QQ, VMate and WPS Office. Trump explained his decision by the fact that these applications get access to confidential information of users, which can then be used by the Chinese authorities for their own purposes. However, the decree will enter into force only 45 days later, after the president leaves the White House. Moreover, the newly elected President of the United States, Joe Biden, has the power to revoke Trump's decree on the first day of his presidency, that is, January 20.
January 11. Oil has renewed its February 2020 high On Monday, March Brent oil futures surpassed $56 per barrel for the first time since February 25, 2020. During the day, quotations decreased slightly, but still remained above the $55 per barrel level. March futures for the Texas WTI reached $51.56 a barrel. The oil market began its growth last week, after Saudi Arabia announced its intention to reduce oil production by 1 million barrels per day in February and March. Earlier at a meeting, the OPEC+ countries decided to keep the current production restrictions. At the same time, Russia and Kazakhstan were allowed to increase oil production in aggregate by 75 thousand barrels per day. Today, pressure on quotes continues to be exerted by investors' fears about the prospects for global economic growth and demand for raw materials amid the further spread of coronavirus in many regions of the world. Traders are confident that a worsening epidemiological situation will inevitably lead to a slowdown in economic activity. Additional pressure on the oil market was provided by the Baker Hughes report, according to which the number of operating oil rigs increased by 8 units to 275, which corresponds to an 8-month high.
January 12. European markets decline amid doubts about vaccine effectiveness European stocks on Tuesday traded in different directions, reacting to the statements of the US Federal Reserve officials about the likelihood of a reduction in monetary stimulus at the end of this year. The German DAX index traded at 13.916 today, shedding 0.14%. The CAC 40 in France also declined to 5.654, while the UK FTSE fell to 6.744, shedding 0.66%. Major global indices have recently shown gains thanks to incentives from central banks and local governments, as well as against the backdrop of the start of mass vaccinations against coronavirus. However, now investors are beginning to doubt the effectiveness of vaccination due to the emergence of new highly infectious strains of the virus.
January 13. Bitcoin shows worst dynamics since March 2020 On Wednesday, the most popular cryptocurrency drops in price, showing the worst trading dynamics since March 2020. Since the beginning of the new year, bitcoin has been showing increased volatility: until recently, the currency was updating its historical highs in the area of $42 thousand, and today it is already trading near $34 thousand. At the same time, JPMorgan bank experts previously said that the cost of bitcoin could jump up to $146 thousand if the cryptocurrency acts as a competitor to gold as a «safe haven». The jump in the price of bitcoin at the end of 2020 came as a surprise to the markets. The previous sharp rise in the digital currency was recorded at the end of 2017, when quotes rose to the level of $20 thousand. After that, there was a certain lull in the cryptocurrency market, and bitcoin entered a period of a protracted depression that lasted until the spring of 2020. In the spring, with the onset of the coronavirus pandemic, the demand for bitcoin grew along with the appetite for risky assets amid massive injections from the US Federal Reserve and central banks of other countries.
January 14. The yield on Italian government bonds rises due to political chaos in Rome The yield spread on Italian and German 10-year government bonds reached its highest level in a month amid political turmoil in Rome and slowdown in economic growth in the country – 116 basis points. Italy has faced political chaos after the party of former Italian Prime Minister Matteo Renzi left the government, stripping the ruling coalition of its parliamentary majority. As a result, the yield on Italian government bonds rose by 4-7 basis points. The underlying 10-year yield rose 6 basis points to 0.617%.
January 15. German economy shrank by only 5% in 2020 According to preliminary data from the German Federal Statistical Office, the country's economy contracted by only 5% in 2020, less than expected. This was facilitated by the decisive measures of the German government, which made it possible to minimize the damage caused by the coronavirus pandemic. The fall in GDP turned out to be less than the forecast of 5.1% and less serious than the record economic contraction in 2009 during the global financial crisis. The agency also noted that the German economy faced stagnation in the IV quarter of 2020, but analysts are still expecting positive dynamics in the new year. Recall, that in March last year, the government of Angela Merkel took a number of measures to rescue and stimulate the largest economy in Europe. Specifically, incentives included helping companies struggling with the pandemic, job protection schemes for employees, tax cuts, and cash disbursements to boost domestic demand. The government also invested in green technologies and infrastructure.
