Market Monitor – 04 December 2020

Market Monitor – 04 December 2020

Optimism about the ability of major western nations to bounce back quickly from the coronavirus pandemic was in short supply this week as concerns about a second wave of Covid-19 grew.

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.

The US

On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 0.2% up for the week so far, with the S&P 500 slightly further ahead, up 0.8%. Daily new Covid-19 cases continue to run in excess of 200,000, and a number of states are considering – or have already announced – new lockdown measures. There are signs, meanwhile, that lawmakers in Washington DC could be on the verge of agreeing a new stimulus package, although it appears unlikely to be on the scale initially demanded by the Democrats.

The UK and Europe

In the UK, the FTSE 100 ended Thursday 1.9% ahead for the week so far. Shares in London have benefited from the British government’s announcement that it has approved the Pfizer vaccine for immediate use, making it the first country to do so. The first batch of vaccines arrived in the UK on Wednesday and the health service plans to start administering shots as early as next week.

There have also been encouraging signs that negotiators could be close to finalising a trade deal between Britain and the European Union.

In Frankfurt, the DAX index ended Thursday’s session down 0.6% for the week, while France’s CAC 40 lost 0.4%. In Germany, chancellor Angela Merkel said that many of the current coronavirus restrictions will now last until early January at least.

27/11/2020
03/12/2020
Change (%)
FTSE 100
5919.6
5785.7
-2.3
FTSE All-share
6367.2
6490.3
1.9
S&P 500
3638.4
3666.7
0.8
Dow Jones
29910.4
29969.5
0.2
DAX
13335.7
13252.9
-0.6
CAC-40
5598.2
5574.4
-0.4
ACWI
623.8
628.5
0.8

Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 22/10/2020.

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4 December 2020
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