If you think that 2021 is the year of healing the wounds for the global economy and markets after the year of the epidemic, then it is, and if you see it as a repetition of the difficult past year, you are not wrong, despite the recovery of the global economy and strong gains for the financial and commodity markets, but the world collided with other strains Corona, a global energy crisis, and a sharp acceleration of inflation, all of which have curbed the full recovery.
Many stations witnessed by the economy and markets, as for the stock markets, despite some turmoil, they achieved strong gains and rose to new record levels in 2021, especially US stocks. An energy crisis with the rise in natural gas prices to record levels, especially in Europe, which was accompanied by a significant rise in coal and electricity prices, with a strong rise in demand.
Gold was the most prominent loser in 2021, recording the worst annual performance in 6 years, as it failed to build on the strong gains it witnessed in 2020, and on the contrary, cryptocurrencies experienced important stations in 2021, from record levels and increased demand for them from major companies The listing of companies and their funds on the stock exchange, and even making it legal currency, as happened in El Salvador.
As for the global economy, it is in the process of strong growth with the easing of restrictions related to Corona, and the return of activity, after its contraction in the year of the epidemic, with a growth of 5.9% in 2021, as expected by the International Monetary Fund, and although the recovery of the economy facilitated the task of central banks around the world in 2021, however, the sharp rise in the inflation rate to the highest level in many years, whether in the United States or Europe at the global level, was a major obstacle to monetary policy, which was confused between raising interest rates to confront the rise in prices, or keeping them unchanged for fear of hindering Economic recovery, but at the end of the year, central banks, led by the US Federal Reserve, decided to reduce stimulus measures in preparation for raising borrowing costs in 2022 in an attempt to curb inflation
global stock markets
US stock indices have taken an upward path not only from the beginning of 2021, but since March last year, when global markets collapsed, as a result of the shock of the Corona epidemic, and despite this, this rising trend was punctuated by many periods of decline, as Corona strains still represent headwinds for gains. stock.
The Dow Jones Industrial Average rose more than 18% in the total for the year, hovering around the levels of 36,500 thousand points, breaking several records, and the index fell to its lowest level in 2021 below 30 thousand points in late January, with the increase in Corona injuries at this time. , but he did not touch it again all year, although he was negatively affected when the Delta strain spread in the middle of the year, as well as the Omicron mutant in late November.
The performance of the Dow Jones index in 2021
In 2021, the Standard & Poor's 500 Index achieved gains of more than 27%, surpassing many records, as it closed at a historical peak about 70 times this year, until Wednesday's session (December 29), and rose close to 4800 points, and thus, it was able to The broader index surpassed the Nasdaq's gains of about 23%, for the first time since 2016.
Although Nasdaq was the biggest gainer last year, technology stocks were somewhat damaged in 2021, due to the spread of Corona vaccines, which affected the shares of companies benefiting from social divergence measures, and the acceleration of US inflation to the highest level in 40 years, caused pressures for companies technology.
The share of the technology giant, Apple, rose to record levels this year, rising by about 35% in 2021, which pushed the market value to touch $ 3 trillion for the first time ever, making it the top global company, even though supply chain turmoil curbed the gains.
While Microsoft's stock was the highest among technology giants in 2021, it rose by about 67%, followed by Google's stock with gains of 53%, then Facebook's share by about 27%, while the stock of the retail giant Amazon was the least rising by only about 5%.
Among these giant companies, Tesla's stock was as usual in the forefront this year, as it managed to turn its bad performance in the majority of 2021 into gains of more than 54% only in the last quarter, as the stock was low since the beginning of the year until late August, with the repercussions of the chain crisis. Supply, before it could make a strong climb with a market capitalization above $1 trillion for the first time ever.
These are the most prominent stations of American stocks in 2021, as for European stocks, they also recorded record levels this year, as the main index Stoxx 600 rose by about 23%, with achieving a historical peak on November 17, near 490 points, but it is close to it. In late December sessions, concerns about the Omicron mutant subsided.
Compared to American and European stocks, the rise in Asian stocks came weak this year, as the Japanese Nikkei index rose by about 5%, and the Chinese Shanghai Composite Index rose by about 4%, after a swinging performance between ups and downs throughout the 2021 sessions.
oil market
A strong recovery witnessed in the oil market in 2021, to heal the wounds of last year, when Brent crude fell below $ 20 a barrel, and we saw the price of US West Texas crude in the negative range for the first time historically last April, but crude prices were not satisfied with compensating its losses during the year of the epidemic, Rather, it embraced levels not seen in 7 years.
The oil market witnessed prominent stations and decisions in 2021, prices interacted with each other a lot, and the reaction was weak in others, but the most prominent thing is the recovery of global demand for crude with the recovery of the economy, which pushed Brent and American crude prices to rise by about 58 percent each, to record The levels of 79 and 76 dollars per barrel, respectively, until the session (December 29).
Brent and West Texas Intermediate crude prices started in 2021 at levels of 50 and 48 dollars a barrel, respectively, and took an upward path until they reached their highest levels since 2014 at levels exceeding $ 85 a barrel in late October, specifically in the session (October 26), before losing Momentum fell below $70 at the end of November, as concerns increased about the impact of the Omicron bore on demand.
The emergence of this new variable pushed oil prices to fall by about 13%, recording the fifth largest historical decline, in the Friday session (November 26), before regaining its gains as the year approaches the end and approaching the levels of $80 again.
Brent crude price performance in 2021
This is the effect of demand on prices in the whole year, but there are also important price stations, the most important of which are the decisions of the OPEC + alliance in 2021, although the gradual increase in production supported crude prices to rise, some decisions had a negative impact, most notably the fall in crude prices by more than 7% in the session (July 19), when the coalition agreed to increase supplies by about 400,000 barrels per day starting in August.
Joe Biden’s announcement of withdrawing 50 million barrels of strategic oil stocks was one of the important stops for the oil market, as it came in coordination with other major consumers of crude such as India, China and Britain, after the American administration was tired of asking OPEC to increase production, in order to reduce gasoline prices. In the US, but really, prices were not significantly affected after this decision was made last November, probably because the market has already priced the move.
When talking about oil this year, it should not be overlooked that the record rise in natural gas prices was the reason for the shift in demand to oil for electricity generation and the like, as record gas prices in Europe in particular caused a global energy crisis, after it was accompanied by a significant rise in prices as well. Coal and electricity, as demand accelerated after the pandemic at a time when supply was in short supply.
gold prices
Looking at other markets, the yellow metal witnessed a lackluster performance in 2021, contrary to expectations, reaching $2000 an ounce and more, but in fact, gold prices lost what they witnessed in 2020 with the outbreak of the epidemic, since it reached an all-time high at $2,067 an ounce in August 2020.
With the epidemic receding in 2021, the attractiveness of the precious metal as a safe haven declined, despite the rise that comes at intervals, due to the outbreak of other strains of Corona, to end the year with losses of approximately 5%, amid the rise of the US dollar, which raises the cost of buying gold for holders of other currencies, as well as the rise US bond yields, which increases the opportunity cost of holding the metal.
Gold prices in 2021
This is what happened to gold in general, but there are important levels witnessed by the metal, which started the year at levels of about 1900 dollars, but tumbled by more than 200 dollars, and fell below 1700 dollars in early March, under pressure from the massive package provided by the administration of US President Joe Biden for relief. of the pandemic, amounting to $1.9 trillion at the beginning of the year.
But with the acceleration of inflation and concerns surrounding the delta variable, prices rose again to over $1,900 in June, and since then gold has failed to reach these levels again and is struggling to stabilize above $1,800, with the US Federal Reserve raising interest rates and starting to cut back. Support and asset purchases, to counteract the sharp rise in inflation in recent months.
Cryptocurrency
Looking at the most attractive and volatile assets this year, and every year, cryptocurrencies have had a different year, rising to a new historical high near $69,000 last November, having surpassed the previous record set in mid-April near $65,000, but with The end of the year is struggling to stabilize at 50 thousand dollars, which means that it achieved gains of about 60% in 2021.
Bitcoin performance in 2021
On the other hand, the Ethereum currency was one of the highest rises in 2021, with gains of more than 400%, after it rose from about $ 700 at the beginning of the year, to a record level above $4,800 last November, before reducing its gains as the crypto market in general fell to 3,700 dollars at the end of the year.
There were many factors behind the rise of the cryptocurrency market, which reached $3 trillion last November, before falling to $2.3 trillion, and among the most important of these factors is Tesla’s announcement of investing in Bitcoin, in addition to other companies that decided to accept the cryptocurrency as a means of payment. Like PayPal, which further legitimizes cryptocurrencies.
2021 also saw the listing of the first major crypto company on Wall Street, coinbase, as well as ETFs linked to bitcoin futures, as well as the adoption of bitcoin as a legal tender in El Salvador as the first country to do so.
Challenges, wishes, successes and failures carried in the year 2021 to investors, and this is the state of the world with all its works, and as it is usually the markets at the end of each year, it celebrates and hopes that the next year will be better, and this is what we wish for all our friends that the year 2022 will be a year that brings you success and happiness
I love you with love and affection
Iyad Abu Aref
Founder of the Namazon website
