US Open – Coming to terms with reality

Investors in need of a lift

Financial markets are getting a reality check, as investors come to terms with the failure of Congress to agree a pre-election stimulus package and surging Covid cases.

Just over a week to go until the US election, it was always likely we could see a little more risk aversion this week given the level of uncertainty that accompanies it, despite Biden’s still strong lead in the polls.

But a stimulus package would have been a nice distraction and seen households and businesses through to the new year when everything will be much clearer. Alas, investors have far too much faith in lawmakers on Capitol Hill.

While it’s not impossible that something can be done at the eleventh hour, with Pelosi claiming she’s waiting for a counter-offer from the White House today, it’s a long shot now. I always thought markets were far too optimistic anyway so that could continue to weigh heading into the election.

The acceleration in Covid cases and hospitalizations is a big worry as this will undoubtedly lead to more restrictions as hospitals become overwhelmed. Governments are trying to take a more targeted approach this time around which will make any economic impact less severe than last time but the uglier it gets, the harder it’s going to be to resist. It could be an extremely tough few months during what is a hugely important time for some sectors.

Economic Calendar

For a look at all of today’s economic events, check out our economic calendar.

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Craig Erlam

Craig Erlam

Former 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.