European markets suffer with Covid cases on the rise
|Thanksgiving celebrations fail to extend to Europe, with stocks pulling back after as Covid continues to hurt economic prospects. Meanwhile, the value story starts to come under the microscope given recent gains.
- European markets suffer as short-term fears dominate
- Value stocks struggle amid cloudy economic outlook
- Vaccine optimism only goes so far, with Covid cases on the rise
In the absence of a cheery US disposition, we have seen European markets flounder somewhat as ongoing questions over the forthcoming economic difficulties overshadowed optimism over future recovery prospects. The outperformance in the more internationally focused FTSE 100 over the FTSE 250 highlights growing fears over the direction of travel for the UK economy. Weakness across banking and airline stocks highlight the fear that the UK will continue to struggle in its bid to get back to normality despite the recent vaccine optimism that has permeated through markets. Undoubtedly value stocks has plenty of upside to come, yet we could be at a point where investors will be left wondering just how long they have to wait until they can judge that actual recovery for themselves.
While markets have largely been willing to overlook any dour data points in anticipation of a vaccine-fuelled recovery next year, the incessant rise in coronavirus cases does provide a sticking point for market sentiment. While traders have been willing to overlook short-term weakness in favour of future growth, we do need to see signs that recent lockdown measures are making a tangible difference to the trajectory of the virus. With Angela Merkel warning that the German partial lockdown would last until at least 20 December (and potentially January), the economic cost is swiftly racking up. In the US, record high cases in Texas and California were joined by a seven-month high in New York cases after they topped 7,000 a day. While many have cheered the prospect of a less divisive approach from Joe Biden, there is also a fear that he could hurt the US economy by enacting a nationwide lockdown after taking office.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.