Just by looking at the stock market, one could be forgiven for thinking that all is well with the world.
The FTSE 100 has had its best-ever start to a year, and across the pond Wall Street opened at a record high yesterday.
In fact, coronavirus is still ravaging Western economies and the US posted a dramatic fall in jobs for December in the first such weakening since April.
The US shed 140,000 roles over the month, down from a rise in jobs of 245,000 in November, according to the Bureau of Labor Statistics.
Just by looking at the stock market, one could be forgiven for thinking that all is well with the world
The numbers were an unwelcome reminder of the start of the pandemic last year, when a record 22million jobs disappeared.
Even at the end of December, around 10million of those had not been clawed back. And yet US stock markets are still hovering around their record high.
While the FTSE100 was treading water yesterday, up just 0.24 per cent, or 16.30 points, at 6873.26, it has started 2021 with a spring in its step.
Over the first five trading days of the year, the index has climbed 6.4 per cent – well ahead of the previous record of a 4.5 per cent rise seen in 1999. That year, the Footsie went on to rocket by 17.8 per cent over the next 12 months.
There’s no denying that the UK has been hit hard by the pandemic, and the economy is not expected to be back to pre-Covid levels for some years.
But the country is ahead of almost any other in terms of vaccinating its population, meaning there is light at the end of the tunnel. And the pessimism directed at the UK last year means London-listed firms are now trading at a heavy discount to many of their rivals abroad. This could set the stage for a strong rally in 2021, if the vaccination programme goes to plan.
As well as beating its own record, the FTSE100 has so far outperformed all other major indexes – including China’s CSI 300, which has risen by 5.8 per cent so far.
Russ Mould, investment director at AJ Bell, said: ‘2021 looks to be off the best start ever in the FTSE 100’s history, all the way back to 1984.’ The mid-sized FTSE 250 was up 0.26 per cent, or 54.38 points, to 21,064.24.
But Bank of America was sounding a note of caution, recommending investors sell shares due to ‘frothy prices’.
The comments from its chief investment officer Michael Hartnett were perhaps more aimed at the US, where stock markets have continued to boom seemingly undeterred by rising Covid cases and violent Trump supporters storming the Capitol.
Bank of America said it had already started to see traders storming into assets seen as less risky, such as short-term debt and gold, as the appetite for stocks waned slightly. Yet gold – which had rallied as high as $1,949 this week – was down again yesterday at $1,864 per ounce.
Bitcoin appears to be the new favoured way to store money among many investors.
This week the digital currency passed the $40,000 mark in a record – just days after breaking through the $30,000 barrier.
Bitcoin appears to be the new favoured way to store money among many investors
But Bank of America was cautious again, saying bitcoin – often perceived as risky as it has no inherent value – ‘blows the doors off prior bubbles’ such as the dotcom boom of the late 1990s, China in the 2000s and gold in the 1970s. Bitcoin last night was trading at more than $39,000.
Back in the UK, pest control firm Rentokil was one of the largest risers on the FTSE100 after revealing strong trading and announcing it would snap up Florida-based Environmental Pest Service.