Weekly Market Update

Author : Rachel Poole
Date : November 14, 2020

Global Market News

Global equities make gains
Global equities made gains this week after promising vaccine news hit the press. The S&P 500 rose more than 2% over the week and the US 10-year Treasury note rose 11 basis points to 0.89%. The price of a barrel of West Texas Intermediate crude oil also rose over the week, ending the week at to $40.14. Volatility continued its decline this week, decreasing to 24 from 28 a week ago.

Markets rally on positive vaccine news
The week began with promising news from pharmaceutical companies Pfizer and BioNTech who announced preliminary data showing a 90% effectiveness rate for a Covid-19 vaccine. Markets rallied on the news that a return to some normalcy might be in sight. President Trump announced on Friday that a vaccine will be readily available to the public as early as April next year.

Updated Market Figures

Coronavirus Updates

Covid-19 by the numbers
Global Confirmed Covid-19 cases: 53,000,000 Global Covid-19 deaths: 1,300,000
US Confirmed Covid-19 cases: 10,700,000 US Covid-19 deaths: 243,000
*As of Friday evening

US Covid-19 cases continue to rise, prompting renewed lockdowns
The US reported over 160,000 new Covid-19 cases yesterday. Unfortunately, the country has been hitting new highs for the last couple of weeks. Over the past five weeks, the number of hospitalizations has doubled. The surge in cases is prompting some states to re-impose lockdowns and travel restrictions. Across the ocean, France and Germany have reported a slowdown in cases after having reimposed partial lockdowns over the last two weeks.

Geopolitics Spotlight

Pro-democracy legislators in Hong Kong resign
After four of their colleagues were disqualified from serving on the Hong Kong’s legislature by a new law imposed by Beijing, the remaining pro-democracy legislators resigned in protest. Under the new rule, people are barred from serving on Hong Kong’s Legislative Council if they support independence, do not recognize Beijing’s sovereignty, or “endanger national security”, among other things. The mainland has denounced the resignations as an “open challenge” to Beijing’s authority.

China to sign trade deal with ASEAN neighbors
This weekend, China will be signing a large trade deal with Japan, South Korea, Australia, New Zealand and the 10 ASEAN member countries. The trade deal is called the Regional Comprehensive Economic Partnership (RCEP) and aims to reduce tariffs, strengthen supply chains, and codify new e-commerce rules in the region. Beijing sees the RCEP as an opportunity to influence regional rules and diversify supply chains amid its trade war with the US.

US Social & Political Developments

Biden declares election victory
Last Saturday, the Associated Press, as well as several other prominent news agencies, declared Democratic candidate Joe Biden the winner of the 2020 presidential election. President-Elect Joe Biden declared victory shortly thereafter, but President Donald Trump has yet to concede. Kamala Harris has made history by being the first woman, the first Black person, and the first person of South Asian decent to become vice president elect. The Democrats have maintained control of the House of Representatives and a run-off election for Georgia’s two seats in January will determine which party has control of the Senate.

Biden appoints Ronald Klain as his Chief of Staff
Despite the legal battles the Trump campaign has initiated in several states, President-Elect Joe Biden has begun building out his administration. This week, he appointed Ronald Klain, a well-known figure in policy circles and a long-time aide of Biden, the White House Chief of Staff.

Corporate/Sector News

EU charges Amazon with antitrust violations

The European Union has formally charged Amazon with antitrust violations. The case centers around Amazon’s role as both a retailer that sells goods and a marketplace for third party vendors. Amazon justifies their dual position by noting that many retailers have their own private label offerings and that online sales are only a small piece of the retail sector. The company is also under scrutiny in the US.

Real estate losses threaten banks’ recovery
The number of banks’ bad loan write-offs are creeping higher and higher as the pandemic rages on. The fear of bankruptcies and defaults in the commercial real estate sector has prompted banks to restrict new lending. History shows that banks have repeatedly failed when encountering big losses in commercial real estate. If banks are forced to absorb large losses in their $2 trillion in commercial real estate loans, the entire US economy will have to deal with the consequences.

IEA lowers crude oil demand outlook
The International Energy Agency (IEA) has lowered its global oil demand forecast. The group now expects demand to contract 8.8 million barrels per day in 2020. A second wave of Covid-19 is weakening demand further at a time when the oil supply continues to rise, resulting in lower and lower oil prices. In just a few weeks, OPEC+ will be meeting to discuss if they will extend or cut production heading into the new year.

Image of the Week

U.S. Dollar Performance After U.S. Elections

Video of the Week

How will the global distribution of vaccines unroll?
Source: DW