Interactive Investor

Market snapshot: a US vaccination boost

14th December 2020 08:10

Richard Hunter from interactive investor

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Americans will start having Covid jabs in a few days, but will this inject investors with more optimism?

A combination of year-end lethargy and the absence of any fresh developments on fiscal stimulus in the US is currently holding back the progress of major markets.

In what has been a defiantly strong year for indices in the US, built on the optimism of a return to some kind of economic normality to follow, investors may be looking to lock in the gains made so far. 

With the Dow Jones ahead by 5.3% in the year to date, the S&P 500 13.4% and the Nasdaq 38%, the absence of any new news on either the slowdown of the pandemic or an agreement to give the economy a further helping hand, could leave investors on the sidelines without the impetus to commit fresh capital.

Some solace may be taken following news that the vaccine rollout is to begin this week in the US, with the first three million doses planned to have been delivered to various states this weekend. However, with daily deaths currently running at new highs, the pressure to administer the vaccine widely is acute.

In the UK, there is no such choice for investors to lock in gains, with the FTSE 100 remaining down by 13% in the year to date.

There has, however been a more recent turnaround in the general direction of travel, with a rally of 17% since the beginning of November giving hope that global investor sentiment towards the beleaguered index could be turning.

In the meantime, the index could come under some shorter term pressure as news that Brexit negotiations are being extended gives a minor boost to sterling, which in turn has an inverse effect on the performance of a basket of stocks largely exposed to overseas earnings.

While it remains too early to predict that the Brexit clouds are clearing, it nonetheless keeps the hopes of the optimists alive that a potentially chaotic no-deal outcome may yet be avoided.

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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