Winter is coming

A torrid start to the week for European stocks and the US isn't faring much better early in the day, as rising Covid cases reignites fears of more restrictions, perhaps lockdowns.

The final months of the year have long been spoken about with some trepidation as far as Covid is concerned. Yes, this could be the period when a vaccine gets regulatory approval but unfortunately, it comes a little late for the dreaded winter period. As UK Chief Medical Officer Chris Whitty claimed, the seasons are against us, with late autumn and winter benefiting respiratory diseases like Covid.

With numbers already on the rise at an alarming rate, the risk of more restrictions is high. The consumer-led recovery may be put on hold before the situation gets out of hand again. Of course, this time is very different from last. We know a lot more than we did about the method of transmission, treatment has improved and many businesses have learned to adapt. That isn't the case for all though which means more pain ahead. It may be time for the governments to step up again.

As far as investors are concerned, we're not seeing the panic we saw last time but today is evidence that they're not particularly comfortable either. The Fed and other central banks displayed incredible competence back in March when being called upon during a remarkable period for financial markets. They passed the test with ease so many not be called upon in the same way again, but that doesn't mean they won't be needed.

Winter is coming and investors need to to be prepared.

Over to you, Prince Abdulaziz bin Salman

Naturally, restrictions and lockdowns don't sit well with oil traders and crude prices are taking another kicking today. Brent and WTI are off around 5% at the time of writing and could come under more pressure as Covid fears mount. One thing they have working in the other direction that they lacked in March was an organized OPEC+, which should prevent a repeat performance.

There's no oil price war, production is already well below the levels it was earlier this year - among both OPEC+ and others - and the group stands ready to act at the first sign of trouble. That may just come much earlier than they anticipated. Saudi Arabia's Energy Minister last week effectively dared traders to short the market, today it's off 5%. We may not have to wait long for a response but in the short-term, lockdown panic may weigh.

Precious metals tumble as dollar favoured

Precious metals are coming under considerable pressure in what is looking like a repeat of earlier this year. The safe haven is once again not providing shelter in these hazardous times. The dollar is instead making strides higher which is further pressuring commodity markets and taking gold with it.

Silver, gold's more volatile sibling, has fallen off a cliff, losing more than 11% at one stage before paring losses to a seemingly more respectable 8% decline. Gold is only off a little more than 2% but threatening to break $1,900 having spent a litte time beneath there already since the US joined.

It will be interesting to see how much investor sentiment is shaken by today's moves. It's certainly an interesting start to the week and one that will catch the attention of policy makers that have been prepared for this for months. How quickly will they look to arrest the panic in the markets that, as we've seen before, can get out of control quickly and how confidence are market participants that they can and will?