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Traders Show Caution Towards Stock Market

Traders Show Caution Towards Stock Market

European stock futures are trading lower as traders have started to reassess the risks associated with coronavirus. Higher stock valuations also aren’t helping the situation.

Volume in the European stock market and the U.S. stock market is likely to remain subdued as the U.S. stocks and bonds will have reduced trading hours.

Overall, it is safe to say that European and U.S. stock markets are set to close the week with a bit of caution, and we certainly lack the same momentum that we saw at the beginning of this week. 

It will be a long road to normality, and traders know that coming Dec 2nd, things aren’t going to be that rosy when England comes out of its second lockdown. The reality is that the whole country will be facing various tiers of lockdown, and some cities will still be in tier-3 lockdown, the strictest form of lockdown.

The U.K.’s Prime Minister, Boris Johnson, is trying his best to get the country out of lockdown, but he knows that the holiday period is just around the corner and it is highly likely that people will break social distance and other preventative rules, which will result in a higher number of coronavirus cases. 

At the same time, traders will be looking at the battle that the Prime Minister will be waging with opposition lawmakers who are going to try their best to stop Boris Johnson from re-introducing new restrictive measures, which can leave an adverse influence on the economy. 

Brexit and Sterling 

As for Brexit, the negotiations have started once again, and Michael Barnier’s meeting with E.U. fisheries will be something that traders will be keeping a close eye on. So far, there is still a lot of optimism among investors that the E.U. and U.K. will strike a last-minute deal.

This is the key takeaway when one looks at the performance of Sterling. Although, the Sterling-dollar pair has a very different story and Sterling’s strength is purely due to dollar weakness, which is still sitting near the two years low (more on currency strength). 

Coronavirus Update 

The global coronavirus cases have crossed the 60 million mark, and unfortunately, 1.4 million souls are no longer with us because of the coronavirus. The U.S. now has 12.88 million cases, the highest number in the world, and India is still sitting at the second spot with more than 9.266 million cases.

The European lockdowns are working as France is on track to post a drop in its average daily infection rate. The French government has a target that the infection number must fall by an average of 5,000 a day by mid-December. Borders will be opening in Italy for quarantine free travel between the U.S. and Italy.   

Cryptos 

After suffering its biggest loss since March yesterday, the crypto beast, Bitcoin has reestablished itself today. Prices are back above the $17K mark, but we certainly need the crypto king to break above the 19,500 mark—the highest price level that we have seen since Bitcoin hit its all-time high. The slump in Bitcoin trading prices has also triggered a sell-off in other altcoins and crypto coins, with the like of XRP and Ethereum suffering tremendous losses.