Jan-2, 2022, US Economical and Stock news and analysis by Forex Forum
Investors have piled into traditionally defensive stocks in the last weeks of the year, spurring a rally some believe may lose steam early in 2022.
The S&P 500's top performing sectors this month are consumer staples (.SPLRCS), real estate investment trusts (.SPLRCR), healthcare (.SPXHC) and utilities (.SPLRCU). Each of the sectors, which are viewed as popular destinations during times of uncertainty, have risen by 9% or more in December and outpaced the broader index's gain of about 5%. (.SPX)
By contrast, the S&P 500's energy (.SPNY) and information technology sectors (.SPLRCT), among the year's best performers, are up 2.9% and 3.3% for December. The broader index is up 27% in 2021 and on track for its third straight year of double-digit gains.
Some market participants, however, believe the rallies in defensive shares are likely a short-term phenomenon and expect an unwinding in early 2022 as investors return to the big technology and growth stocks that have led markets higher for years.
On the other hand, This year will be dominated by efforts to fight inflation along with climate change, while global economic growth will be reasonably strong and stock markets weak, according to an economic forecaster.
The world starts the year with economies held back by a supply chain crisis and the rapid spread of the Omicron coronavirus variant, but the global economy is still expected to grow by about 4% in 2022, compared with an estimated 5.1% in 2021, according to the Centre for Economics and Business Research (CEBR), a UK thinktank.
Douglas McWilliams, the founder and executive deputy chairman of the CEBR, said the group had been forecasting 6.7% growth for the UK in 2021 but reduced it to 6.6% after a weak December. "We estimate £3bn or so of lost GDP from people staying at home and not spending, plus the impact of the restrictions in Wales and Scotland." Similarly, the 2021 forecast for global growth was cut by 0.1 percentage points to 5.1%.
GDP is forecast to grow by at least 4% in 2022.
Sitting around doing nothing (or passive investment) is an admirable strategy in most years. In 2021 it was masterly. London's stock benchmark, the FTSE 100, ended December 14.3% higher than last January, and in the US buying shares has been even more rewarding: the S&P 500 went up more than a quarter in value.
But even though money was apparently so easy to make last year, investors and economists are putting on a show of wariness for 2022.
"Investors have enjoyed bumper returns over the past 18 months, but these returns are, in large part, borrowed from the future," says Joseph Little, chief global strategist at HSBC Asset Management. He thinks a "pay-back period" is in order.
Source: theguardian.com
Elsewhere, Hurricane Ida, the ninth named storm in another Atlantic season for the books, clobbered New Orleans and much of Louisiana with deadly 150-mile-per-hour winds in the final week of August. But it was far from done.
Ida then spun north, retaining plenty of punch to flood New York's subway system, kick up seven tornadoes in New Jersey and Pennsylvania and turn inland Philadelphia's freeways into canals. Ida cost $65 billion, according to some measures, and 115 lives; including 50 deaths in the less-suspecting Northeast alone. The property damage made it the most expensive natural disaster of 2021. Floods in Europe came second at $43 billion.
In all, the top 10 natural disasters totaled at least $170 billion, according to insurance data, news reports and other sources compiled by U.K. nonprofit Christian Aid.
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