After yesterday's 'Trump pump', stocks are back in the red. Our head of markets explains why.
Markets retained positive momentum with a “Trump pump” as the President was released from hospital.
Sentiment was also helped by apparent progress in the fiscal stimulus package negotiations in the US, which investors are increasingly pricing in to provide a much needed boost to economic prospects. The latest round of job losses from Cineworld Group (LSE:CINE) – which has implications for both the US and UK job markets - underlined the issue, with the shares plunging on the news.
Meanwhile, details of the President’s treatment provided a further spike for pharma shares, particularly those whose medicines were used, namely Regeneron Pharmaceuticals (NASDAQ:REGN) and Gilead Sciences (NASDAQ:GILD).
The relief in investor fortunes now leaves the Dow Jones down just 1.4% in the year to date, the S&P 500 up 5.5%, with the Nasdaq index continuing its stellar outperformance, up 26.3% in 2020.
Further colour will be provided on the global economy later, with speeches expected from both the European Central Bank and the US Federal Reserve, while in the UK the Purchasing Managers Index is expected to show that the construction industry is still growing, albeit at a lesser pace than the previous number in August.
The FTSE 100 index remains friendless as international investors file the UK’s issues under “too difficult”, with economic prospects seemingly bleak given the likely spike in unemployment to come and the possibility of failing UK/EU negotiations. Despite some tentative early week gains, the index remains down 21% in the year to date, encumbered also by the underperformance of some of its main constituent sectors, such as the oils and banks.
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