FTSE holds gains while Wall Street suffers an early fall

European indices have come off their earlier highs, while the US has fallen into the red, as risk appetite takes a hit thanks to new lockdowns and the impending Georgia election.

Morning optimism evaporates
Wall Street stumbles on first day of 2021 trading
FTSE miners hold on to solid gains

Stock markets have found it tougher to maintain their optimistic tone from earlier in the day as the UK seems set to head back into full lockdown, and in the US tensions mount regarding the Georgia senate election tomorrow. The confident write-ups from earlier today that predicted a strong year ahead based on the first hours of trading have been scrubbed as Wall Street heads sharply into the red. Investors are acutely aware that tomorrow’s election could have a major bearing on the policies of the incoming administration, but they also have renewed worries about the current incumbent and his ongoing quest to overturn November’s result. Political instability is back on the radar, hitting the market with a volley of concerns that threaten to unseat the rally in risk appetite that had been building earlier in the day. 

The return of lockdowns and the weaker Chinese PMI figure overnight have not dented the FTSE’s mining sector, which is enjoying a strong day. Of course this is in no small part down to further USD weakness, a trend from 2020 that seems set to stay with us in 2021. But it also suggests confidence in the economic rebound in Asia and other emerging markets, backed up by the bounce in EM indices and ETFs this afternoon. The West might still be struggling, but investors remain willing to look past the current problems, especially as vaccines come online and production increases.