Market snapshot: row in US over economic recovery plan

by Richard Hunter from interactive investor |

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As the pandemic continues to damage the American economy, there are now implications for Thanksgiving.

The gap between the discovery and actual distribution of a Covid-19 vaccine has again been accentuated, as the strength of the pandemic continues to undermine economic recovery while further details of a roll-out are awaited.

In the US, where the cumulative numbers have now reached 250,000 deaths and almost 12 million cases, there has been an advisory for citizens not to travel over the upcoming Thanksgiving period. This has further implications for oil demand and general retail spending, and comes at a time when emergency loans programmes are nearing an end.

There are also fears of a rift developing between the Treasury and the Federal Reserve in how to tackle the next stage of the economic hit. While there are some glimmers of hope for a new fiscal package in the new year, any discord between the two bodies threatens to rattle investor sentiment, where continued monetary and fiscal support has been seen as a given throughout the health crisis.

Even so, Wall Street managed to eke out small gains overnight on those cautious hopes of a resumption of talks in the Senate around a new fiscal stimulus. In the year to date, the Dow Jones index is up by 3.3%, the S&P 500 10.9% and the Nasdaq 32.6%.

In the UK, the recent progress of the premier index has been hamstrung by additional economic concerns.

The Brexit negotiations are now reaching the final furlong and, for the moment, the political grandstanding eclipses any mutually acceptable progress.

The lack of a deal would of course exacerbate the UK’s travails, and was further highlighted by the release of government figures reporting significantly higher levels of borrowing accompanied by lower tax receipts, putting further pressure on a deficit which will ultimately need to be dealt with.

More positively, UK retail sales continued to grow, although at a lesser pace than in recent months given the new restrictions, with a suggestion that some of the figure was caused by the pulling forward of Christmas purchases by consumers.

While the FTSE 100 has stabilised over recent trading sessions, the index remains down by 16% in the year to date, with a difficult few months ahead both home and abroad.

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