12 / 20


After a record November for the global markets, the momentum of the financial markets flattened somewhat with increasing concerns about mutations of the Covid-19 virus and tighter lockdown measures by governments. Most stock indices were nevertheless able to make further gains. U.S. President Elect Joe Biden has already announced some key positions of his cabinet. The former Federal Reserve Bank President Janet Yellen is likely to become the next Secretary of the Treasury and John Kerry is likely to straighten some screws in the U.S. climate policy as Climate Special Envoy. Markets were particularly pleased with the nomination of Janet Yellen. Whether Joe Biden can count on a majority in the Senate will be decided as early as the Senate elections in Georgia on January 5, 2021. However, polls, which no longer seem to be reliable, assume a narrow victory for the two Republican candidates. The US Congress has finally been able to agree on another urgently needed fiscal program worth $892 billion. The money is intended to alleviate the negative effects of the lockdown. President Donald Trump had initially threatened to veto the package, saying the direct payments to citizens were too low from his optics. He drew bipartisan criticism with this stance. The USA has already spent an estimated 18% of its economic output on combating the negative consequences of the pandemic.

Equity markets

Global stock markets closed higher in December. Technology-heavy U.S. indices topped the gainers list, while Europe and Asia showed less momentum. Fears around COVID-19 mutations created volatility in the second half of December. The fear barometer VIX shot up to over 30 in the US, albeit briefly. Such sharp movements are rather unusual for the normally very quiet month of December. Many of the trading participants have already taken leave of the daily business, which was evident from the very low volumes. Despite, or even because of the pandemic, some of the stock barometers even gained significantly over the year (see FOCUS). Despite catching up at the end of the year, the United Kingdom (FTSE100) and the Spanish (IBEX 35) suffered major losses for the year. The domestic Swiss share index SMI was only slightly higher at +0.8%.

Interest rates

The latest central bank meetings of the ECB as well as the FED have not created any new facts. It is therefore not surprising that government bond yields in the U.S. are only slightly higher thanks to reopening optimism. In Europe, where fears about Covid-19 mutations and government-imposed lockdowns are much more real, interest rates have returned to the lows established before the vaccination news.

Currencies / Commodities

Over the year, most G10 currencies lost significant ground against the Swiss franc. The USD ended the 2020 trading year 8.5% lower. The Canadian dollar and the Norwegian krone each lost around 6.5% and even the Japanese yen lost a good 3.8%. The Swedish krona was the winner against the Swiss franc, gaining +4.2%. Sweden's unique Corona strategy, which completely dispensed with lockdowns, helped the economy to recover more quickly. It also weathered the pandemic with a milder recession relative to other G10 countries. Cyclical commodities, on the other hand, ended the year mixed - with oil prices still 20% lower, while copper prices rose by almost 30%. Precious metals gained strongly with silver at +47.9% and gold at +25.1%.


At this point, the global equity market recovery appears to have become increasingly fragile due to viral mutations, sovereign lockdowns and, most importantly, unilaterally positive investor sentiment and positioning. Low interest rates and the expected recovery of the global economy continue to favor equity investments in the medium to long term. However, the comments and assessments of the investment houses for 2021 also show a very uniform confidence, which we cannot fully share from a tactical point of view. In addition to the almost euphoric mood caused by the vaccine news, increased insider selling, restraint in share buybacks by companies and the high speculative appetite of private investors are now warning of a tactical correction. Therefore, in our opinion, the purchase of put options is currently worthwhile. With these, the risk can be reduced and at the same time the upside potential is preserved, which is an important factor especially in the case of a pronounced exaggeration. Thanks to the sharp drop in implied volatility on the financial markets since November, such options are once again available at lower prices.

We wish all readers a happy new year 2021!


Focus Market Forecast