Weekly Market Insight

Latest Economic & Market Update 23rd November 2020

23rd November 2020

Good afternoon, it is November 23rd 2020 and here is your economic and market update from BlackBee. 

Today’s focus:

  • US Treasury Secretary, Steve Mnuchin asks for Federal Reserve to return funds from five emergency programmes.
  • European stocks record third week of gains in best run since July.

US stocks slipped on Friday following a dispute between the Federal Reserve and the US Treasury. Late Thursday evening, outgoing US Treasury Secretary Steve Mnuchin penned a letter to the chair of the Federal Reserve Jerome Powell, asking the Central Bank to return unused funds from five emergency programmes. These funds allow the Federal Reserve to lend when markets are stressed. The Federal Reserve followed up swiftly by issuing a statement urging for the programmes to be maintained into 2021. The Federal Reserve are of the view that the economy still remains “strained and vulnerable” and that the extension of these emergency programmes would guarantee stability in financial markets. Mr Mnuchin is arguing that many markets are no longer at risk of seizing up and that companies don’t need more loans, they need more grants from Congress. The US Treasury and the Federal Reserve usually coordinate together in times of crisis and appear jointly before Congress, however, it now appears that they are in conflict. In addition to this, Congress are still at an impasse regarding the injection of further fiscal stimulus which poses a threat to the economic recovery in the US. If these programmes were to expire, in the event that they would be needed again the programmes would need to be approved by Treasury. The concern that was evident in markets on Friday is that it would increase the difficulty for the Biden administration in tackling the economic fallout especially if some financial markets begin to show signs of strain again.
As a result of the conflict between the Treasury and Federal Reserve, the S&P500 and Nasdaq edged -0.68% and -0.42% lower. On a positive note, Pfizer and BioNTech submitted their Covid-19 vaccine for approval in the US. Pfizer’s stock rose 1.4%. It is the first pharmaceutical company to apply for regulatory approval and both Pfizer and BioNTech stated that if the vaccine is approved, doses of the vaccine would be ready to ship. The approval could come as early as mid-December. In Europe, the Stoxx Europe 600 recorded a third week of gains as investors move into economically sensitive sectors. The Stoxx Europe 600 closed the week 1.2% higher and is up 13.8% over the last three weeks.
Source: Bloomberg

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

Global Market Update
(as at close of markets 20/11/2020)