Weekly Market Insight

Latest Economic & Market Update 20th November 2020

20th November 2020

Good afternoon, it is November 20th 2020 and here is your economic and market update from BlackBee. 

Today’s focus:

Graph of the Week: Lending standards tighten in Euro Area

Our chart of the week here shows the quarterly bank lending survey published by the European Central Bank. The Q3 release shows that bank lending conditions tightened during the period, indicating that lending into the economy was likely drying up at present despite interest rates being rock bottom right now. This won’t surprise too many investors considering Covid-19 related losses are likely to rise for Euro area banks over the next few months.

Although lower lending might represent a short term headwind for the economy, the chart shows that the tightening is modest so far and nothing like the freezing up of lending markets we witnessed during the Global Financial Crisis. We believe that lending conditions should improve over the next twelve months, helped further by the prospect of a Covid-19 vaccine which hopefully might accelerate a return to normal for most economies. But rising Covid-19 bank loan losses and lower lending volumes both pose difficulties for banks looking to pay dividends to shareholders, another example (on top of zero deposit rates and near zero bond yields) of how investor income and returns are being squeezed by the pandemic. 

At a glance:

  • US jobless claims rise for the first time in 5 weeks with 742,000 Americans filing for first time unemployment benefits.
  • WHO advises doctors against prescribing Gilead’s remdesivir to coronavirus patients in hospital stating there is currently no evidence that it improves the survival or the need for ventilation

Best & Worst Performers of Large Cap US Stocks on Thursday
Click image to enlarge

Global Market Update
(as at close of markets 19/11/2020)