US Open – Sentiment not improving

Headwinds are growing more fierce

Investors are growing increasingly unimpressed with the near-term prospects for the global economy and the markets are suffering the consequences.

Rising Covid cases, a fiscal void in Washington and monetary policy caution is taking its toll on investor sentiment as we head into a challenging winter period, fraught with uncertainty.

The economic data, particularly in Europe, is already highlighting weaknesses in the hugely important services sector and with Covid cases rising and governments being forced to re-impose restrictions, that’s unlikely to change. It could be a difficult few months for investors.

Of course, there is one obvious thing that could change all of that, a vaccine. Trump remains as determined as ever to have something to dangle in front of voters in time for the November election, something that is becoming increasingly challenging. Even if one ticks all the boxes, widespread distribution won’t be available until spring next year. Still, an announcement and roadplan would certainly buoy investors. November could be very interesting.

UK announces new job and business support measures

There may be a fiscal void in Washington but Downing Street today came out firing with new plans to support employment over the next six months, during which new restrictions will once again put a significant squeeze on many businesses. The new scheme will aim to protect as many viable jobs as possible by subsidizing employees that work at least a third of normal hours.

Of course, this will not protect all of the people that were covered under the furlough scheme so we should still see a significant rise in unemployment when it ends next month. Hopefully the number will be much reduced though, as a result of today’s announcement. Accompanying this was support for businesses that will also face an extremely challenging six months.

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 BNN. 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