The past year has been dominated by the horrors of Covid and by the end of the year there had been approx. 280 million cases worldwide and 5.5 million deaths.
2021 was a year when the Taliban returned to power in Afghanistan as coalition forces exited. In the US, Trump supporters attacked the Capitol building, the seat of US legislation. And as Russia looks to flex its muscles (and expand its borders) towards the end of the year tensions with Ukraine ratcheted up, with Russia amassing a sizeable force on the border.
With the Suez Canal blocked for almost a week by the Ever Given, a 20,000 TEU container ship, rising energy prices and Covid disruptions, we saw global supply chain bottlenecks and sky-high freight rates.
Central banks became increasingly concerned about inflationary pressures, with the Fed seeking to rein in the tapering and increase rates; the 10 Year US Treasury yield closed the year above 1.5%, having started at 0.91%.
The VIX averaged 19.7%, compared with 29.3% in 2020, peaking end of January, although there were various spikes in February/ March, May and December as Covid spooked markets.
Driven largely by tech stocks, the S&P 500 easily outperformed the Dow and the Nasdaq, up 26.9%, versus 18.7% and 21.4%. European stocks likewise registered healthy gains for the year, with the Euro Stoxx 600 index up 22.4%, although the FTSE 100 somewhat lagged up 14.3% and the Dax 15.4%.
The non-fungible token (NFT) market hit $40 billion.
Crypto currencies continued to expand with the two largest, Ethereum and Bitcoin, up 455% and 60% respectively, although it was a bumpy ride. Bitcoin broke through the $1 trillion valuation before heading back to around $900 billion. The biggest increase in crypto was a SAND token, which increased by 16,265% (source: CoinTelegraph), but Solano was arguably the biggest winner, up 11,202% with a meaningful market cap of $53 billion.
In metals, Copper was up 26.8%, Nickel up 26.1% and Ali up 38.2%. In contrast to non-ferrous, precious metals struggled, with Gold down 3.6%, while Silver fell by over 10%.
Food costs were at their highest for a decade; Corn was up 22.6% and Wheat up 20.3%.
Long Oil was a boon for commodities investors, with WTI up 55% for the year and Natural Gas (Henry Hub) up 40.7%. In the UK, gas prices were 435% higher than a year earlier, driven by European shortages, due to supply issues from Russia, combined with low European production and storage levels. LNG saw a significant uptick in Asia demand as countries moved away from Coal, then cargoes were diverted later in the year to Europe to meet its shortfall.
M&A set new records, with global deals worth more than $5.8 trillion (source: Refinitiv).
There were 334 SPAC deals announced, although activities slowed down during the year as regulators became increasingly interested in these vehicles.