Downside risks a growing concern

It’s not taken long for sentiment to turn sour again in Europe, with stock markets once again heading south having been quite flat earlier in the day.

US futures aren’t doing quite as badly but there’s plenty of time to catch up if sentiment doesn’t improve. The same old issues are holding these markets back, considerably economic and political uncertainty – particularly in the US – worring Covid trends in Europe and a lack of new fiscal and monetary support measures in Washington.

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The election could increasingly become a point of concern for investors. It’s already not going to be a normal election, with the votes taking much longer than normal to count. Add in the confusion that follows and the possibility of Trump contesting the result and it could get very messy, indeed. That must be playing on investors minds.

That would be a lot to take in normal times and we are not living through ordinary times. The election is taking place just as many countries will be in or heading for a potentially devastating second wave of Covid-19, forcing restrictions and maybe even more lockdowns that would be hugely damaging for the global economy. A vaccine can’t come soon enough.

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