Western markets look set to end the week on a sour note, with the FTSE slipping to a 9 day-low as trading closed and both its US and European equivalents weathering similar drops.
The FTSE is among the worst casualties of the day, contemplating the new Office for National Statistics (ONS) data revealing that UK GDP shrank by 2.6% in November as swathes of the UK faced a second national lockdown, marking the end of a six month long period of growth for the struggling economy. The index closed the day down -1.18% at 6,721.95 points (GMT 16:18).
Despite all the buzz around President-elect Joe Biden’s $1.2tn economic relief package, the Dow Jones emerged unimpressed and still appears to be coming to terms with yesterday’s news that US jobless claims have risen to their highest levels since last August – and are ticking ever closer to the 1 million mark. The US index fell -0.70% to 30,774.03 points (GMT 16:19).
On the continent, the DAX has had an especially rough day – down 1.83% to 13,732.79 points (GMT 16:23) as German pharmaceutical firm Pfizer announced it will be reducing its vaccine deliveries to EU nations as it renovates its main production plant (much to the dismay of the German Health Ministry), while the CAC also slipped 1.51% to 5,595.21 (GMT 16:24).
Commenting on today’s market performances, Spreadex‘s Connor Campbell said:
“The markets suffered a sophomore slump in the 2nd week of the year, culminating in some rather ugly losses this Friday afternoon.
“Conscious of the difficulties in getting anything done in the American political system, let alone when you are trying to impeach the outgoing President, investors greeted Joe Biden’s $1.9 trillion covid-19 stimulus plan with a ‘we’ll see’.
“Unfortunately that meant attention lingered on a rough couple of days for US data. Following on from Thursday’s sky high jobless claims figure – the worst since the end of August, and perilously close to the 1 million mark – investors had to deal with a pair of glum December retail sales readings suggestive of a tough Christmas across the country”.
And in regard to the European indices, it looks as if ongoing concern over the British, South African and Brazilian variants of Covid-19 is keeping investors feeling cautious, along with further teething issues with the UK’s newfound independence from the EU looking far from over.
“It’s not necessarily looking any easier for the markets next week,” Campbell said. “If they can pull themselves out of this New Year nosedive is arguably doing to be down to 2 things: how chaotic Biden’s inauguration ends up being, and how quickly the Democrats can get down to the dirty business of passing bills once the new POTUS takes office”.