Weekly Market Insight

Latest Economic & Market Update 9th November 2020

09th November 2020

Good afternoon, it is November 9th 2020 and here is your economic and market update from BlackBee. 

Today’s focus:

  • Biden elected 46th President of the United States.
  • Housing prices among OECD countries continue to climb despite economic downturn.

Joe Biden has been elected as the 46th President of the United States. In his victory speech, Biden stated that he intended to “restore the soul of America”. He called for the country to come together as he aims to close the divide between the American people calling it a time to “heal”. He also called for Democrats and Republicans to work together. Mr Biden is expected to unveil a task force of top scientists to advise him on how to implement a plan to tackle the pandemic as the country is currently recording over 100,000 cases daily. Dealing with the pandemic is at the forefront of Biden’s plans as he stated that “we cannot repair the economy, restore our vitality, or relish life’s most precious moments… until we get this virus under control”. Investors were projecting a “blue wave” and were expecting the Democrats to regain control of the Senate – however the Republicans are currently leading the race to control the Senate meaning that any legislation attempted to be pushed through could potentially be in a gridlock if Republicans do win control. This also applies for the fiscal stimulus bill that Democrats have been pushing for in the last couple of months when they controlled the Senate. The fiscal stimulus package could potentially come in smaller and later than expected if this is the case. Regarding the effect of Mr Biden being elected on markets, investors were prepared for a reflationary trade which would have been based on strong economic growth accompanied by inflation as a result of a new fiscal stimulus package. However despite control of the senate still not decided, investors are hopeful of the Democrats regaining control and passing this stimulus package as US futures are pointing higher on Monday morning with the S&P500 futures up 1.167% as of 10.30am. (Source: Financial Times).
Typically housing prices tend to fall when there is a downturn in economic activity. However this year, housing prices have continued to climb in many countries despite the economic fallout caused by the pandemic. Among the OECD countries, housing prices have climbed almost 4% this year on an annual basis. Government and Central Bank stimulus have provided an environment where many workers keep earning and borrowing costs remain near record lows allowing for housing prices to continue to climb despite economic fundamentals suggesting that prices should fall as many people have lost jobs and lockdowns threaten economic activity again. The continuous climb in housing prices continues to add to the housing crisis in Ireland, an issue that BlackBee aims to tackle through social and affordable housing investments. (Source: Irish Times).   

Best & Worst Performers of Large Cap US Stocks on Friday
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Global Market Update
(as at close of markets 06/11/2020)