Having fallen during the week before last, global equities have since been spurred by the Joe Biden victory and Pfizer vaccine hopes. On Thursday, however, some of the good-feeling steam wore off, as investors greedily priced in potential upsides in the short-term.
Choosing to be overly optimistic in the moment, markets are now watching equities look for something to be excited about. As stated by IG Chief Market Analyst, Chris Beauchamp:
“Equities have moved lower this morning, as the vaccine bounce begins to fade across markets. After days of gains the rally in equities is beginning to slow down, as indices throughout Europe move into the red.”
“As enthusiasm about a vaccine begins to fade the FTSE 100 has lost ground, with a slowdown in the excited buying of hard-hit value names in sectors like travel, airlines, banks and others.”
Having soared on Monday, Rolls Royce has spent a few days shedding points, down by an additional 8% on Thursday. Similarly, having enjoyed an escape from a difficult year so far this week, oil blue chips such as BP and Shell followed the path of airlines, and watched their shares fall.
Another issue has been a lack of positive developments – which is giving markets mixed messages. Mr Beauchamp added:
“Political developments, or lack thereof, continue to have little impact, with the lack of any White House pronouncements helping to calm market nerves about the US political outlook.”
Spreadex Financial Analyst, Connor Campbell, added on Brexit:
“The mid-November deal deadline is almost upon us, with no agreement in site, and Boris Johnson’s government internally in chaos after the departure of director of communications, and Dominic Cummings ally, Lee Cain.”
With global equities lacking a reason to celebrate, Eurozone indexes slipped, with the DAX down 1.2% and the CAC falling 1.5%. Slightly ahead of its European counterparts, the FTSE fell by 0.7%, lifted slightly by a sharp drop-off in Sterling.
Notably, the Dow Jones was down by over 1.3%, and the Nasdaq fell by 0.8%. Even with vaccine jubilation fading – which should favour 2020’s growth stocks – big tech couldn’t muster up enough strength to lift US markets.