Please see the below market update from Brooks Macdonald:
- US and Global markets hit all-time highs as vaccine euphoria continues
- European COVID-19 cases fall as US numbers continue to mount
- Brexit talks enter yet another key week as one month of transition period remains
US and Global markets hit all-time highs as vaccine euphoria continues
US and Global markets hit another all-time high on Friday as the vaccine tide lifted all ships. Signs of a smoother transition from the Trump Presidency to Biden also spurred a regional outperformance of the US over Europe despite the former having more of a growth skew within its mega caps.
European COVID-19 cases fall as US numbers continue to mount
This may be the first Monday in a month that does not have a vaccine efficacy trial linked to it. Over the weekend, there were several reports suggesting that the UK could be the first country to approve the Pfizer vaccine, while the US Surgeon General is expecting Pfizer to seek authorisation for emergency use on 10 December. This means the first round of vaccinations may occur in the UK and US ahead of Christmas. This may increase the palatability of shorter-term restrictions that are the source of a Conservative MP revolt in the UK currently. More generally, the weekend continued the narrative of slowing infections in Europe but cases that continue to grow in the US. The state level restrictions in the US are more piecemeal, meaning the response, as we saw over the summer surge, tends to be slower and less uniform.
Brexit talks enter yet another key week as one month of transition period remains
Another ‘key’ week for Brexit passed uneventfully though; with only four weeks left until the end of the year, the key one must surely be approaching. This week, face-to-face meetings continue and comments over the weekend suggest that a deal is getting closer. On the level playing field, UK Foreign Secretary Dominic Raab said that he could see ‘a landing zone’, similar to words used by the EU a few weeks ago. This implies that the main issue is now fisheries, which remains a sticking point despite the small contribution that the industry provides to GDP. The UK Government is concerned that giving too much ground on fisheries will mean that the UK has not ‘taken back control’ of its borders. While the next UK election is a long way away, there is undoubtedly a political angle to the optics of any deal. With the three developed world vaccine front runners having reported their early stage efficacy, this week may be less dramatic in terms of stock rotations. The US jobs report on Friday may be a source of volatility, however. Initial Jobless Claims have risen for the last few weeks, so investors will be watching closely to see if this is sufficient to stop the improvement in headline employment numbers.
Please keep checking back for our regular blog updates.
Andrew Lloyd
01/12/2020