There's plenty that could still go wrong, but traders are now looking beyond the current pandemic.
Any concerns about the timing of a vaccine roll-out were swept aside as both the Dow Jones and the S&P 500 surged to record highs.
Despite the level of Covid-19 cases remaining uncomfortably elevated, and with unemployment still an unsolved problem in the background, US investors are currently positioning for the post-pandemic environment.
In addition, markets were buoyed by the news that the Biden transition to the White House has now formally begun, thus removing a level of uncertainty around a contested election result. Reports that the highly respected former Federal Reserve Chair Janet Yellen could be in line for an appointment as Treasury Secretary was also well received.
Further strong buying pressure ahead of its imminent inclusion in the S&P 500 pushed Tesla (NASDAQ:TSLA) shares higher yet again, pushing its market value above $500 billion and resulting in a cumulative gain for the shares of over 560% in the year to date.
The latest bout of bullish sentiment leaves the Dow Jones ahead by 5.3% this year, and up 62% since the low recorded at the height of the pandemic in March. Meanwhile, the S&P 500 is now higher by 12.5% in the year to date, and the Nasdaq 35%.
The FTSE 100 index has been a partial recipient of the improving anticipation of a global recovery, helped by the recent rally in the oil price from a previous low of around $20 to $48. The price still remains down by 28% in the year to date, but hopes of renewed demand following the successful distribution of a vaccine has resulted in a recently strong performance for the likes of the airline stocks and, of course, the oil majors.
The Chancellor’s Spending Review later today may have an impact on sterling, with concerns about further borrowing potentially being offset by investments aimed at stemming unemployment and kickstarting infrastructure spending.
The FTSE 100 remains down by 14% in the year to date, but a spike of 16% since the end of October suggests that appetite for the index may be slowly turning more positive.
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