Macroeconomic/ geopolitical developments
- The announcement last Monday from Moderna that their COVID-19 vaccine produced very positive trial results sustained the prior “risk on” theme, evident after the similar announcement from Pfizer the Monday before.
- This “risk on” tone was further reinforced by another positive statement from the Astra Zeneca/ Oxford University trial in the week.
- On the US politics side, there is still a negative impact for markets from the absence of a transition of power, as the Trump administration continues to dispute the election result.
- Republican Senators have agreed to restart talks on a new pandemic relief package.
- The second wave of COVID-19 continues across Europe, but the number of cases is either falling, plateauing or the growth is slowing across the continent, with new lockdown measures kicking in.
- In the US, however, COVID-19 cases are surging across all states with many new lockdown measures being established.
- Worries that the new lockdowns will damage the global economic recovery, seem to be already priced into markets.
- The UK and EU continue with their trade talks, with mixed messages, although slightly on the positive side.
Global financial market developments
- After an initial push higher reacting to the Moderna announcement, global stock indices marked time for much of last week, consolidating the aggressive gains seen in the first half of November.
- The EURO STOXX 50 and FTSE 100 did manage to hit new recovery highs
- The “risk on” phase continued in the Forex space which saw “risk currencies” higher again.
- This saw the Australian, New Zealand and Canadian Dollars all strengthen, with the NZDUSD Forex rate hitting yet another new multi-year high.
- The “risk on” environment saw the safe havens weaken, with the US Dollar again establishing itself as the G3 weakling, lower versus both the Japanese Yen and Euro.
- GBPUSD rallied after a dip, with ongoing hopes of an EU-UK trade deal.
- In the commodity space, Copper was significantly higher, again reflecting the “risk on” theme, whilst Gold and Oil went sideways.
Key this week
- Geopolitics:
- Thursday is Thanksgiving in the US, with financial markets closed and also a half day holiday on Friday afternoon.
- Markets will monitor further potential vaccine announcements and potential approvals.
- COVID-19 cases, hospitalisations and deaths remain in the spotlight in Europe and particularly for the US.
- Plus, any new lockdown measures, again particularly from the US
- Developments in the transition of Presidential power in the US.
- Central Bank Watch: No Central Bank meetings or minutes, but various speakers are active through the week
- Macroeconomic data: Another relatively quiet week on the data front, but the standouts are Global Markit Flash PMI on Monday, German GDP and IFO Survey, on Tuesday plus US Consumer Confidence, then Wednesday brings US Durable Goods, PCE and weekly Jobless Claims.
Date | Key Macroeconomic Events |
23/11/20 | New Zealand Retail Sales; Global Markit Flash PMI |
24/11/20 | German GDP and IFO Survey; US Consumer Confidence |
25/11/20 | US Durable Goods, PCE and weekly Jobless Claims |
26/11/20 | US Thanksgiving holiday, all US markets closed |
27/11/20 | US markets half day for Thanksgiving holiday |