Market Monitor – 16 October 2020
Insights

Market Monitor – 16 October 2020

Global stock markets have struggled to hold on to their recent gains this week as a wave of new Covid-19 lockdown restrictions loomed, in Europe in particular. Meanwhile, the upcoming presidential election in the United States continues to create uncertainty for investors – and there have been mixed messages from politicians in Washington about the prospect of a new economic stimulus package being signed off before polls close on 3 November. Reports on coronavirus vaccine developments have been in short supply recently, and the news that the Johnson & Johnson trial had been suspended after a participant fell ill has only served to underline the fact that a route out of the pandemic remains hard to foresee.

The US

On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 0.3% down for the week so far, although the S&P 500 had managed to edge into positive territory (+0.2%) by the same point. US stocks have largely managed to outperform their European counterparts this week: on Wall Street, reporting season has started and there has been positive news for the banking sector as well as the likes of logistics firm FedEx – which points to an improving American economy. Nonetheless, unemployment claims have risen again this week and there are still fears that Covid-19 infection rates could spike in the near future in the way they are currently doing on the other side of the Atlantic. One of the biggest drivers of market sentiment this week has been the prospect of a new multi-trillion-dollar stimulus package being approved before the election. Investors seemed resigned earlier in the week to further delays, but bullish comments by Donald Trump and Nancy Pelosi, the Democrats’ leader in Congress, helped fuel optimism on Thursday.

The UK and Europe

The picture in Europe this week has been far less hopeful for investors, with news of soaring coronavirus infection levels and fresh economic restrictions creating a bleak outlook. In the UK, the FTSE 100 ended Thursday 3.1% down for the week after prime minister Boris Johnson announced a new three-tier system of lockdown rules which will see many businesses in the worst-affected areas forced to shut down, at least temporarily. Unemployment in Britain continues to rise and analysts warned that the UK could face a severe joblessness crisis by the end of the year. Meanwhile, more restrictions on international travel – people who arrive from Italy are the latest to be told they face a 14-day quarantine – have added to the pressure on airlines and their suppliers. A lack of progress in Brexit talks has added to the general gloom. In Frankfurt, the DAX index ended Thursday’s session down 2.7% for the week, falling to near its lowest level this month. While the German stock market has been one of the world’s best performers since the pandemic hit, the news this week that infection rates were increasing sharply around the country has raised fears that new economic restrictions could be imposed. In Paris, the CAC 40 lost 2.2%, with France continuing to see coronavirus cases soar.
09/10/2020
15/10/2020
Change (%)
FTSE 100
6016.7
5832.5
-3.1
FTSE All-share
3378.6
3287.0
-2.7
S&P 500
3477.1
3483.3
0.2
Dow Jones
28586.9
28494.2
-0.3
DAX
13051.2
12703.8
-2.7
CAC-40
4946.8
4837.4
-2.2
ACWI
584.6
582.0
-0.4

Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 15/10/2020.

16 October 2020
Mark King
Head of Investment Content
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Market Monitor – 16 October 2020

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