Sunday 22nd November 2020
It is a time between hope and fear: the virus is causing concern, while vaccine development is shedding some light on the horizon. The Brexit talks are also a hangover. The general mood is nevertheless positive. Investors prefer to look far into the future – beyond the crisis.
Despite the successes in developing a corona vaccine, investors are likely to have turbulent weeks ahead of them. “Experience has shown that it is less the cold season and more the pandemic fatigue that causes the number of cases to rise again,” say the experts at the asset manager Western Asset Management. The current restrictions to contain the corona virus are useful, but are at the expense of the economy.
Chris Beauchamp, chief market analyst at brokerage house IG, points out that the approval and wide distribution of a vaccine will take some time. “That leaves investors worried about how much the second wave will spread and how bad the situation will be over the winter.”
Against this background, stockbrokers are eagerly awaiting the Corona summit from the federal and state governments on Wednesday. The still rapidly increasing number of infections is fueling the debate about further requirements for restaurants, schools or contact restrictions. According to information from Reuters from country circles, it is currently most likely that the closure of restaurants, for example, will be extended and new requirements imposed in schools. The retail trade should therefore remain open in the important pre-Christmas business.
Positive mood: what will the Brexit talks bring?
Overall, however, the mood is positive, says investment strategist Axel Botte from asset manager Ostrum. “The financial markets have obviously decided to ignore short-term risks and are already looking to the time after Corona.”
The most recent Dax rally lost momentum, however. On a weekly basis, the leading German index had only managed a meager increase of 0.6 percent. In the previous two weeks he had gained just under five and eight percent.
Investors were also encouraged by media reports on progress in the Brexit negotiations. According to them, after years of tug-of-war, the UK and the EU could put their future relations on a contractual basis in the new week. However, Börsianer was nervous when the talks were interrupted due to a corona case in one of the delegations. According to the Finnish European Minister Tytti Tuppurainen, the talks are at a critical stage and the time pressure is enormous. Without an agreement, the introduction of tariffs at the end of the year threatens economic burdens for both sides.
Economic data at a glance
When it comes to economic data, investors are turning to the US consumer spending on Wednesday. The buying mood of consumers is considered to be the mainstay of the world’s largest economy. A few hours later, the US Federal Reserve the minutes of their most recent meeting. Stock traders expect them to provide further evidence of an expansion of Fed asset purchases in December.
Overall, however, stock market operators expect little impetus from Wall Street, which will be closed on Thursday for the Thanksgiving holiday and will close its doors on Friday at noon. Many US investors take this opportunity for a short vacation.
This side of the Atlantic stands on Tuesday the Ifo-Index, which reflects the mood in the German boss floors, on the schedule. A comparable barometer at European level will follow on Friday. The day before the GfK-Index Information about the mood of German consumers.