European Wrap – Winter is coming

Panic setting in

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.


This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam
Craig Erlam

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