European markets suffer as elevated COVID cases hurt growth prospects


The lack of a major reversal in European Covid cases is hurting sentiment, with stocks drifting lower at the open. Brexit talks look set to continue, yet we have seen precious few signs of a potential breakthrough.  

  • European markets head lower, as Covid cases continue to hurt sentiment.

  • Political risk fades as Trump admits he would concede.

  • Brexit talks continue, yet key hurdles remain. 

European markets are heading lower despite a relatively bullish overnight session in Asia, with fears over elevated Covid cases undermining some of the recent vaccine optimism. German cases have topped one-million mark, with daily deaths up to a record 426; highlighting the ongoing difficulties in bringing the virus under control. Despite optimism over the future growth trajectory, there is no getting around the fact that a more drawn-out period of lockdowns will weigh heavily on European growth. Political risk out of the US is all but gone after Donald Trump admitted he would concede if the electoral vote is confirmed in favour of Joe Biden. There is little hope of the president reversing a comprehensive victory from Biden, and the prospect of a peaceful handover alleviates some of the underlying risk for markets.  

Michel Barnier is heading to London in a bid to help break the deadlock in Brexit talks today, with just five-weeks to overcome a seemingly insurmountable fish-shaped wall in negotiations. Unfortunately, the evident desire to reach a deal from both sides has not been matched by a willingness to compromise, and thus there is little to indicate we will overcome the final hurdles. The issues of fishing right, state aid, and future dispute resolution remain a trio of hurdles which remain the three major sticking points which could ultimately lead the UK out of the EU without a deal. Nevertheless, with the pound having gained ground against the euro over recent months, it is clear that traders either expect a last-minute breakthrough or have simply taken on a more relaxed stance to what originally touted as the worst-case scenario in 2016. 

Ahead of the open we expect the Dow Jones to open 52 points higher, at 29,924.  

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