Stocks Lower As Covid Cases Rise, US Stimulus Hopes Fade
Fiona Cincotta October 15, 2020 7:31 AM
Covid cases are rising tougher lockdown restrictions are being implemented, Boris Johnson is disappointed by Brexit talk progress and a US stimulus agreement is still some distance away. EU stocks are heading lower.
There seems to be little to buoy sentiment on Thursday. Covid cases are rising, in some cases, at an alarming rate, tougher lockdown restrictions are being implemented, Boris Johnson is disappointed by Brexit talk progress and a US stimulus agreement is still some distance away – which makes it hardly surprising that European bourses are coming out of the starting blocks on the back foot.
Here in the UK Manchester and Lancashire could be next to move into Tier 3 with London also expected to move up a Tier in the coming days. Northern Ireland has also set out plans for a 4-week lockdown.
The news comes as the OECD warns that the UK risks economic scars rom Covid and Brexit. The Britain’s economy is on track to record -10.1% GDP contraction this year, making it one of the hardest hit by the pandemic. The UK’s ability to bounce back is largely dependent on the course of the virus and the restrictions needed to contain it. However, the potential for a messy Brexit adds a whole other level of uncertainty.
Heading towards the start of the EU Summit, Boris Johnson is disappointed with the progress achieved in Brexit talks. Leaders at the EU Summit, who will assess the progress of negotiations so far are expected to conclude that progress is still insufficient. However, the Pound is holding onto the majority of gains from the previous session on expectations that negotiations will continue despite Boris Johnson’s line in the sand date of today.
US Fiscal stimulus unlikely before elections
US fiscal stimulus talks are going nowhere fast. Recent optimism that some form of stimulus could be agreed before the US elections is fading rapidly. With just 3 weeks to go, and Joe Biden extending his lead in the polls it seems that the Democrats don’t want to give Trump the political victory. Additional fiscal stimulus is unlikely now until after November 3rd which could keep pressure on stocks and boost the safe haven dollar in the near term.