Last week saw US Equities rise to new all-time highs, in spite of weaker than forecast payroll data and somewhat discouraging COVID trends. Aside from optimism about the delivery of a vaccine, better COVID trends outside the US and the suggestion that a US stimulus package would be agreed contributed to optimism. UK equities outperformed strongly (by 2.5%), supported by strength in oil names as OPEC deferred the scheduled increase in production into Q1, thereby supporting the Oil price. Economic data and earnings trends continue to be supportive, although Europe and Emerging Markets are seeing improving momentum while the US is waning. Purchasing Managers data last week was broadly supportive, though data on the US labour market was less so.
Turning to COVID, global infection rates are improving although the US remains a hotspot. The decelerating growth in infections shows that the recent restriction measures have had an effect. Mortality trends are up, but new “active” case numbers are falling and mortality trends should track them with a lag.
Turning to this week, today is the deadline day for all US states to confirm their election results and this will be followed by the Electoral College vote on 14 December. On the Brexit front, Boris Johnson is travelling to Brussels for emergency talks following a call with European Commission President von der Leyen yesterday evening. Both the European Central Bank and the EU Council are due to meet on Thursday. In the case of the latter, Poland and Hungary are in strong opposition to the EU’s budget over the rule-of-law mechanism. Also on Thursday, the US FDA is due to meet to consider emergency approval of the Pfizer vaccine. The UK began its roll out of the vaccine this morning. Company results season is dying down, however Adobe tomorrow is of particular interest to us, whilst DocuSign, which I mentioned last week issued particularly strong results on Thursday.