European Wrap – Investors take shelter

Election uncertainty adds to downside pressure

A mixed day for Europe, while Wall Street is heading for its worst week since March as election day nears.

The downside risks that have been evident in these markets for weeks are slowly materializing and the next big uncertainty – the US election – is now upon us. It’s little surprise investors are heading for the havens, there’s hardly an abundance of good news out there.

The breakdown of stimulus talks on Capitol Hill was a bitter blow – and, bizarrely, seemingly an unforeseen one – and its been downhill since. The surging number of Covid cases and lockdowns in Europe has seriously taken its toll as well and stoke memories of March when the walls were closing in and it became a matter of when, not if, we’d be next.

The lockdowns may not be quite as severe as earlier this year but when they arrive they will be very restrictive with some businesses forced to close, others seeing a fraction of the footfall and the rest of us spending most of our time at home as social gatherings are discouraged or banned altogether. It’s going to take a significant toll on the economy.

The election is up next and, whatever the result, investors will surely be hoping for the smoothest possible outcome. It obviously won’t be straightforward and there will be controversy but a challenge to the result will create the uncertainty this market – and the US itself – desperately needs to avoid. A bit of good news will be very welcome.

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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