Market Monitor – 04 December 2020

Global stock markets have enjoyed a largely positive week as last month’s strong run carries over into December. There has been further good news on coronavirus vaccines, with Moderna completing the final stage of its trials and a number of countries indicating that they are planning to roll out the first wave of inoculations before the end of the year. But optimism about the potential impact of these vaccines continues to be tempered by the ongoing impact of the pandemic, with cases continuing to rise across the United States and in many parts of Europe and the rest of the world. Meanwhile, new figures from the OECD indicate how long-lasting the impact of the Covid-19 crisis could be: the organisation expects the global economy to contract by 4.2% this year, with growth of only 4.2% forecast for 2021. At the moment, however, there is considerable uncertainty about the extent to which this outlook could be changed by the vaccines that are being brought to market by Pfizer, Moderna, AstraZeneca et al: should initial vaccination programmes produce encouraging results, this could lead to a surge in confidence as some coronavirus restrictions are lifted. November has already clearly demonstrated vaccines’ ability to lift markets: most of the major indices on either side of the Atlantic enjoyed growth of more than 10% last month thanks largely to the pipeline of positive trial news. The possibility that the next couple of months might see a repeat of this upsurge means that investors are more likely to stay in the market for the foreseeable future.