A new lockdown in the UK and disagreements in OPEC+ forced investors to go into defensive assets

The confident growth on the stock exchanges gave way to a rapid decline following the yield of the main government bonds. The deterioration of the situation with the coronavirus in the UK was a root cause, and there is an acceleration of the daily increase of infected. According to the latest numbers from the Hopkins Institute, there are 58,923 new cases in Britain. Against this background, British Prime Minister Boris Johnson signed a decree on the need to close public places and self-isolate the population.

According to the Chief Executive Officer of the British Retail Consortium, 178,000 workspaces in the realm of trade have been cut so far, and the situation could become even worse with the new restrictive measures. The consequences can be serious for medium and large businesses up to a new wave of bankruptcies. The damage is estimated at around £ 2 billion per week in the retail sector.

The stock market has lost about 1.5% and is now stabilizing near mid-December highs. European bond yields fell significantly. American Treasuries remain stable at 0.930%. Investors are awaiting the results of the second round of the US Senate elections. In Georgia, a decision is pending – whether the Democrats will take a majority in Congress, which may increase the chances of strengthening the fiscal stimulus of the US economy.

Also, investors will be evaluating data from the manufacturing sector from the ISM Institute. A slight slowdown is expected in December. Estimates can change the course of trading on stock exchanges and the foreign exchange market.

Stock indices have stabilized but are trading in different directions. The dollar index remains close to the December lows.

S&P 500 (F) 3,700.62 +8.37 (+0.23%)

Dow Jones 30,223.89 -382.59 (-1.25%)

DAX 13,703.25 -23.49 (-0.17%)

FTSE 100 6,596.66 +24.78 (+0.38%)

USD Index 89.645 -0.200 (-0.22%)

• – Germany Unemployment Change at 11:55 (Dec.) (GMT+2);
• – US ISM Manufacturing PMI at 18:00 (Dec.) (GMT+2).

by JustMarkets, 2021.01.05

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.