Weekly Market Update

Author : Rachel Poole
Date : November 7, 2020

Global Market News

Global equities continue their fall

Despite not having a final election result, volatility dropped this week and global equities made substantial gains. The Cboe Volatility Index (VIX) fell from 37 last week to 24 at market close. The yield on the US 10-year Treasury note closed at 0.82% for the week though it rose sharply to 0.95% on Election Night and flattened after it became clear a “blue wave” was unlikely. The price of a barrel of West Texas Intermediate crude oil made up some ground from last week’s dip, ending the week at $37.44.

October economic data points to recovery
The US unemployment rate fell more than expected in October and more jobs were added than anticipated. Non-farm payrolls rose by 638,000 and the U-3 unemployment rate dropped to 6.9%. The US has now recouped more than half of the 22 million jobs lost, but a second wave of Covid-19 cases will certainly make it difficult to sustain the recovery. In other good news, the US manufacturing PMI, as measured by Institute for Supply Management, hit a two-year high which is another sign of recovery.

Updated Market Figures

Coronavirus Updates

Covid-19 by the numbers
Global Confirmed Covid-19 cases: 49,100,000 Global Covid-19 deaths: 1,240,000
US Confirmed Covid-19 cases: 9,760,000 US Covid-19 deaths: 236,000
*As of Friday evening

US continues setting new Covid-19 case records
The US reported 121,000 new Covid-19 cases on Thursday, breaking the previous record set on Wednesday. Dr. Anthony Fauci said this week that the US was poorly positioned headed into winter and that an abrupt change in the country’s public health response was needed. More European countries announced lockdowns this week, including Austria, Belgium, and Greece. However, the lockdowns this time around are less restrictive and more targeted now that there is more knowledge about the virus and the detrimental economic impacts.

Geopolitics Spotlight

Conflict in Ethiopia raises fears of civil war
Ethiopia’s central government ordered military action against the autonomous northern region of Tigray after it accused the Tigray People’s Liberation Front of attacking a military base and attempting to steal artillery. The conflict is sparking fears of a civil war in Ethiopia.

Terrorist attack in Vienna
Monday night, four people were killed and 23 others wounded in a terrorist attack in Vienna, Austria. The gunman, who was a young man previously jailed for trying to join the Islamic State in Syria, was shot dead by police. Austria’s Chancellor, Sebastian Kurz, said that the incident was an Islamist terror attack but was clear that the country’s fight is against “barbarism”, not against Muslims.

US Social & Political Developments

US patiently awaits election results
It has been four days since Election Day and the next US President is yet to be declared. The results are coming down to a few key swing states. Though votes are still being counted, Biden appears to be in position to take the presidency. However, Trump has already launched legal challenges in several states. So far, it seems that the Republicans will retain control of the Senate with the very small likelihood that Democrats will be able to pull off a “blue wave.” However, they are poised to keep majority in the House.

Can we expect a stimulus package by the end of the year?
Senate Majority leader Mitch McConnell said a new economic stimulus package was at the top of his priorities when Congress returns to work next week. Many are hoping the partisan tensions that prevented an agreement before the election will be eased after the election. McConnell added that he thinks a new package needs to happen before the end of the year. Democrats may be willing to compromise on their plan now that a Democratic sweep of the Senate is not expected.

Corporate/Sector News

Ant Group’s IPO is postponed

Chinese regulators halted Ant Group’s IPO just two days before it was scheduled to launch. The event was set to be the world’s largest stock debut. The move comes after months of tensions between Jack Ma, co-founder of both Alibaba and Ant Group, and top regulators led by Vice Premier Liu He.

Californians vote in favor of exempting Uber and Lyft drivers
California voters voted in favor of Proposition 22 which exempts drivers of app-based transportation and delivery companies, like Uber and Lyft, from being classified as employees. The proposition allows Uber and Lyft to continue their operations in California after months of negotiations with the state. The companies will still guarantee new protections for their drivers, such as healthcare subsidies, occupational accident insurance, and reimbursements for gas and vehicle costs.