The four-week period since our last note has seen a continuation of the rally in international equity markets along with a bit more ‘business as usual’ as the NASDAQ out-performed the broader markets again.

The S&P 500 rose around 3%, ahead of the other leading markets, which were all up but by more modest amounts. The ‘rotation to value’ has persisted with under-performance from the Consumer Staples and Pharmaceutical sectors v. out-performance from the Energy, Mining, Consumer Discretionary and Financial sectors. With the virus on the rampage again, I wonder if this process might pause for breath over the next few weeks, despite the good news of the commencement of vaccinations.

Unilever has fallen around 10% despite completing the unification of its structure under the one PLC parent at the end of the month. Nestlé suffered a similar set-back along with most of this ‘defensive’ sector. Pfizer was the only one of the leading pharmaceuticals to put in a positive performance as the UK moved to approve their vaccine, all the rest fell back, AstraZeneca by around 9% as questions were raised over the presentation of its vaccine trial results.

Big oil had a second month of recovery in the wake of the oil price, all being up by more than 10%, Royal Dutch Shell by almost 20%. The miners jumped with metals prices, Rio Tinto and BHP both being up by mid-teens percentages, but the feature was Glencore, which rose by 25% as long-term CEO, Ivan Glasenberg, announced his intention to retire in six months. It is unfortunate that Glencore have never made it back to their 2011 IPO price.  

The Consumer Discretionary sectors saw some good moves, Sony Corp continued strong in the wake of their latest console while Nike benefited from strong consumer reports. The motor companies all had a good time of it, the German companies, BMW, Daimler and Volkswagen all rose as did Ford and General Motors in the States. Nissan Motor stood out with a 28% jump as Japan heads more towards electric vehicles, Nissan have sold more than 500,000 of their Leaf all-electric car. But then there was Tesla, with a current market capitalisation of $600 billion following a meteoric rise of more than 600% this year, defying any rational attempt at valuation. Shortly to enter the S&P 500 Index, Tesla will rank in the top ten companies by value, bigger than Berkshire Hathaway and, apparently, more than twice as valuable as Walt Disney. Adding together the values of Daimler, Ford, Honda, Nissan, Toyota and Volkswagen doesn’t get to one Tesla.

Most of the Financial sectors were strong, US and European banks in particular. Citigroup and Morgan Stanley were both features but the Spanish banks, Banco Bilbao and Banco Santander rose by 33% and 22% respectively, it has been a dreadful few years for both share prices until now. Elsewhere in Europe, the French Banks, BNP Paribas and Societe Generale, continued to recover as did the Swiss Banks, Credit Suisse and UBS Group.

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