November 16, 2020

Stock Futures Trade Higher, Boris In Quarantine

Stock Futures Trade Higher, Boris In Quarantine

European and U.S. futures are climbing higher as traders are cheering the news that there is sufficient opposition for another national lockdown in the U.S.

President-elect Joe Biden’s advisors oppose the idea of a second national lockdown despite the increase in the coronavirus cases. The coronavirus situation over in the U.S. has deteriorated significantly, and the hospitalization rate is also on the rise. 

Quarantine

Boris Johnson was forced into quarantine, and this has derailed his plans to get the country back on the recovery track. Boris Johnson was expected to make a number of key announcements, which included the green plan.  Johnson’s quarantine happened after he had contact with a lawmaker who was infected with Covid-19.

Brexit Talk

Once again, the deadline for Brexit negotiations is under threat, and there are strong chances that the negotiations could easily be stretched out to the next few weeks. Traders are very much used to this idea as a number of informal deadlines have lapsed already. What matters, is an agreement, and if both sides think that they can hammer out all the details, and if the only thing that they need is more time, markets will easily live with that. This is because no one wants to witness a disorderly Brexit, this is not on the cards for traders, and disorderly Brexit is certainly not priced in the markets.

China’s Dominance and Trade Deal

A historic trade agreement was signed among the ASEAN. China was successful in getting the trade deal over the line. It took almost four years for ASEAN to agree to this historic trade deal. The comprehensive trade plan between the 15 nations is going to help their economic partnership flourish, as this is the first relation of its kind.

Prior to this, there has never been a trade agreement between the Asian countries. Of course, this relationship poses a big threat to Europe, and the U.S. Trump administration has pulled itself out of these discussions. That means that now, the U.S. has no power over this relation. The ASEAN trade agreement also represents a threat to Europe, where leadership is under immense threat, and more inward policies are becoming more popular. Angela Merkel, the German Chancellor, has kept Europe united for a long time; however, her time in office is limited.

Geopolitical Tensions

Donald Trump is expected to ranch up the pressure on China during his final days in office. It is expected that the president may impose more sanctions and tariffs against Chinese companies or government officials. If this course is followed, it is highly likely that we could experience higher volatility in the U.S. stock market.

The Best Performing Market

The Spanish IBEX and the Italian FTSE MIB have been the lagging indices over the last few months. However, the IBEX has been under more pressure, as its economy is heavily reliant on tourism. Given that we have seen much stronger data on the potential coronavirus vaccine and more news is expected this week, the IBEX could see another positive week. Nonetheless, the Spanish index performed well last week; in fact, the weekly gains for the index was the biggest since 1998.

Commodities

We are still seeing more interest in crude oil prices, and it is likely that this trend will continue as long as the crude oil price stays above the 40-dollar mark. Investors are keeping a close eye on the coronavirus situation over in the U.S., and as long as another national lockdown isn’t applied, it is likely that the bull trend will remain in place.