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Sunlit uplands or COVID gorge?

Halloween is around the corner and markets had plenty to frighten them last week. Across Europe, the second wave of infections has risen higher than the first. While new lockdown measures are less stringent this time (schools and businesses can remain open unless social distancing is impossible), shutting down social interactions, just as the service sector was finding its feet, has the potential to put the recovery back on hold.

Brexit rumblings continue to scare too, as the previous week’s high tensions – as Boris Johnson told the nation to prepare for a ‘no deal’ – carried over. But the noise abated as both sides agreed a new mid-November deadline. Judging from last week’s price moves, capital markets think the bluster on both sides is just that – currency and stock markets barely moved in response.

 

Canary in the oil well?

Back in February, tumbling oil prices were a harbinger of things to come. It became clear the world was heading for a crisis – one that would eventually force governments to shutter their economies and plunge the global economy into its deepest-ever recession on record. The economic ice age to come would severely hamper oil demand – often considered a proxy for global economic activity.

But demand issues were only one side of the story. OPEC+ members (Russia being the leading non-OPEC player) used this moment to break their accord on oil production. Crude oil supply flooded the market just as demand was drying up, causing an almighty drop in prices.

 

Green energy overtakes Tech’s ‘Big Five’ as 2020 winners

Over the course of this year – and well before – we have grown used to the incredible outperformance of the US technology sector. Such is the size and strength of Silicon Valley that at times US mega-cap tech stocks have accounted for most price moves in the overall stock market. But tech has been far from the only ‘winner’ out of the pandemic, even if it has been the most noticeable. In fact, since global stock markets sunk to their depths in March, green stocks – those that stand to benefit from environmental regulation and the shift towards cleaner energy – have rivalled the performance of the five biggest tech stocks (Facebook, Apple, Amazon, Microsoft and Google).

 

Read the full commentary here

 

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