Interactive Investor

Market snapshot: optimism despite mob violence in Washington

7th January 2021 09:31

Richard Hunter from interactive investor

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Markets take violence in Washington in their stride, but there are other issues at play here.

In the US, investors looked past the ugly scenes in Washington to reflect on an outcome in the state of Georgia which completed the so-called “blue sweep”.

Sentiment was generally positive on an outcome which is something of a double-edged sword. On the one hand, the new balance of power is largely expected to result in increased fiscal stimulus and infrastructure spending, but it may also be accompanied by higher taxes and regulation. On the latter, the Nasdaq lost some ground as concerns for the effect on big tech begin to intensify. There's concern that a Democrat-controlled Congress increases the possibility of antitrust legislation aimed at the sector.

Even so, both the Dow Jones and S&P 500 moved to new record highs as medium term optimism, particularly on the pandemic vaccine and economic recovery, continued to prevail.

In the UK, the FTSE 100 continued its notably strong start to the year, with another positive opening leaving the index up by over 6% in just a few trading days, although stocks have since pulled back.

Oils, miners and banks contributed to the initial rise, along with the increasing suspicion that there may be buying interest emanating from international institutional investors who had previously shunned the index for some considerable time.

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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