Further lockdown restrictions have done little to help sentiment, with rising jobless claims, Brexit fears, and a lack of a US stimulus breakthrough providing a pessimistic outlook for stocks.
Markets slump as London is placed on tier 2 restrictions
Pound turns lower as Brexit fears are compounded by economic fallout of Covid lockdowns
Initial jobless claims rise, with fiscal package still out of reach
Market sentiment continues to sour as a London lockdown poured fuel to the fire for Coronavirus concerns. The recent European underperformance established through a sharp surge in daily Covid deaths remains in play, with FTSE 10 declines double that seen in the Dow. While the US does still have a comparatively elevated number of coronavirus deaths per million, the fact is that the likes of the UK is on a much steeper trajectory as things stand. The decision to push London onto a phase 2 stage does little to help boost confidence in the outlook of the UK economic hub, with the tier 2 restrictions bringing plenty of downside without the benefit of economic support associated with a tier 3 lockdown. From an FX perspective, the pound looks likely to suffer, as the economic lockdown repercussions are compounded by the continued lack of progress in Brexit negotiations
US economic expectations took a hit today, with jobless claims rising to once again highlight the faltering economic recovery. The one bright spark came in the form of further declines in the continuing claims number, which fell to a six-month low of 10 million. Nevertheless, US markets have plenty of reason for uncertainty, with initial jobless claims flatlining for over a month, and multi-month negotiations over another fiscal package once again proving fruitful. While the optimists could point towards the possibility of an oversized Democrat package if the Biden takes the White House, that could be some time off as inauguration comes over two-months after the election itself.
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