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Global equities (+3.9%) rose in December, ending the year with a 14.8% gain. Vaccine rollouts, central bank support, and government stimulus helped drive markets higher, despite a surge in COVID-19 infections across many areas of the world. The US government agreed on a pandemic relief package that extends many of the Coronavirus Aid, Relief, and Economic Security (CARES) Act support measures, including renewed direct payments to households and an extension of unemployment benefits. The European Central Bank (ECB) expanded its massive monetary stimulus program by €500 billion, as a new wave of lockdowns weighed on the eurozone’s economic recovery. The European Union (EU) and China struck an agreement that will provide European companies greater access to China, while the US government strengthened its recent sanctions on companies with links to the Chinese military. The UK and the EU secured a trade deal, setting the terms for a post-Brexit future and ending four years of political negotiations that began with the UK’s 2016 referendum on EU membership.
US equities (+3.8%) ended a tumultuous year at a record high, with surging stock prices and vast equity inflows driving valuations to their highest level in years. Despite concerns about the slower-than-expected rollout of vaccines and anxiety that US economic growth could suffer during the winter months due to the ongoing rise in COVID-19 cases, markets were bolstered by optimism that vaccines will support a broad reopening of the US economy in 2021. The US government unveiled a long-awaited stimulus package, worth approximately US$900 billion, which extends unemployment benefits into March, provides direct payments to US households, and supplies funding for small businesses, schools, and vaccine distribution. The Federal Reserve (Fed) committed to purchasing at least US$120 billion of US government debt per month until the economic recovery realizes substantial progress, predicting that interest rates will remain near zero until at least 2023. Merger volume in the fourth quarter was on track to be…
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