By Noreen Burke
Investing.com – Equity markets are likely to focus on two interlinked themes this short week: rising expectations for a coronavirus vaccine and the rapid spread of the pandemic in the United States. Economic data, including reports on personal spending and consumer confidence, will indicate whether the virus resurgence is raising concerns about the economic outlook just ahead of Black Friday, the kick-off event for the holiday shopping season. Data for the euro area is likely to signal a significant decline in business activity, as new containment measures will be fully reflected in the figures. Meanwhile, the UK and the European Union appear to be on the verge of reaching a post-Brexit trade deal. This is what you need to know to start your week.
1. The optimism of vaccines facing the reality of the virus
Stock market investors are weighing the risks of the virus’s rapid spread and potentially robust economic recovery once a vaccine is distributed to the public.
The benchmark index has recently soared to all-time highs on evidence of high efficacy rates for two experimental vaccines – Moderna’s and the one developed jointly between Pfizer (NYSE 🙂 and BioNTech. Both vaccines could be ready for approval and distribution in the United States in a matter of weeks.
But the pandemic remains an immediate threat as the United States registered its 12 millionth COVID-19 case on Saturday, ending a multi-day streak of record infections. Meanwhile, all signs point to millions of Americans traveling for the Thanksgiving holidays, ignoring warnings from health officials about the increased spread of the virus.
2. US economic data.
The United States will release its report on Tuesday. Wednesday will be a busy day on the economic agenda with data pointing to a slowdown in October, while everything indicates that the third quarter figures will not be revised.
Other reports include figures for, which will be followed closely after last week’s unexpected surge signaled that the job market recovery may have stalled. We will also know the data for the,, and before the Thanksgiving festivities on Thursday.
The Federal Reserve will publish its last meeting with investors on Wednesday looking for any indication of possible adjustments to its asset purchase program. Meanwhile, appearances by regional Fed chairmen Thomas Barkin and Charles Evans on Monday and James Bullard on Tuesday will also garner attention.
3. Black Friday
In a normal year, American shoppers would prepare for the arrival of “Black Friday,” the traditional start of the holiday shopping season. But not this year. While the rise in coronavirus cases makes the usual scenes of consumers crowding into stores to grab deals unlikely, online orders are expected to skyrocket.
Oxford Economics forecasts holiday sales to rise just 0.6% from last year due to the combination of the coronavirus, declining income and a weakening job market. Macy’s (NYSE 🙂 is forecasting a difficult period with a possible 20% decline in sales during the downturn.
But not everything is doom and gloom: Walmart (NYSE 🙂 anticipates a promising holiday season and the results of Nordstrom (NYSE :), Gap and Dollar Tree will offer more information.
4. Pessimism about the euro zone PMI
Preliminary November readings of euro zone business activity on Monday are expected to be bleak given the resurgence of the coronavirus and the second round of lockdown measures put in place to contain it.
While a small decline was seen in most indicators last month, these readings are expected to show a significant drop. This is largely due to the service sector, which is where all the restrictive measures have been felt so far, but there is likely to be some impact on the manufacturing sector as well.
5. The Brexit roller coaster
The United Kingdom appears to be on the verge of reaching a post-Brexit trade agreement with the European Union that would regulate their relationship after the end of the transition period on January 1, 2021, with only six weeks left.
Brexit deadlines have come and gone several times in the past, but negotiators are giving one last push and all signs are that London and Brussels will reach some sort of deal – possibly a minimally worded deal, with details to be decided. on the progress.
Recent rallies in UK stocks and shares mean assets have been buoyed by hopes for a vaccine and a Brexit deal, but could be headed for a bumpy ride.