The US government expects economic aid package implementation no sooner than mid-March. The UK labor market continues to decline

With the extension of state aid, the UK labor market showed more resilience than expected. Although the negative tendency prevails, it is not as severe as experts had predicted. The Office for National Statistics claims that the unemployment rate rose by 5% in the country during this period, the highest level since 2016. The economists predicted its growth at a level of 5.1%. Job losses comprised 88,000, the lowest mark since July. The total number of people who have lost their jobs since the start of the crisis is 828,000.

There are fewer catalysts for further stock market growth. German IFO data showed a lack of optimism regarding the economic recovery in the medium term. As Germany extends COVID-19 restrictions at least till mid-February, fears of economic contraction in the first quarter are growing.

The financial assistance package implementation may take more time than many investors would want. Senate Majority Leader Chuck Schumer says that it’s unlikely that new stimulus measures on Joe Biden's bill will take place until mid-March. In light of the news, contracts on the Nasdaq 100 declined. Treasury bond prices rose sharply overnight, dropping the yields. US Treasuries have lost about 60 basis points, and now the yield is hovering around 1.040%.

The reports on the rate of vaccination in Europe serve as an additional negative factor. The drugmaker Merck discounted the development of a vaccine due to insufficient test data. After that, the World Health Organization warned that the current level of vaccination would not be sufficient to stop the spread of the virus in the foreseeable future.

In the light of this new information, the stock market is losing its position while the dollar is growing.

Main market quotes:

S&P 500 (F) 3,841.88 -6.62 (-0.17%)

Dow Jones 30,960.00 -36.98 (-0.12%)

DAX 13,821.50 +177.55 (+1.30%)

FTSE 100 6,681.75 +42.90 (+0.65%)

USD Index 90.427 +0.054 (+0.06%)

• – The UK Average Earnings Index including bonuses (Nov) at 09:00 (GMT+2);
• – UK Jobless Claims Change (Dec) at 09:00 (GMT+2);
• – United States CB Consumer Confidence Index (Jan) at 17:00 (GMT+2).

by JMarkets, 2021.01.26

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.