The FTSE (^FTSE) lost its footing on Thursday after European markets were initially rallying at the start of the session.
Overall activity was subdued as Americans celebrated Thanksgiving and US trading took a pause due to the holiday.
European markets opened higher but then headed lower at mid-day and into the market close, with the FTSE (^FTSE) down 0.4%. Germany’s DAX (^GDAXI) gained 0.1% and the CAC 40 (^FCHI) in Paris was barely up 0.03%.
US stock futures were largely muted on Thursday. S&P futures (ES=F) were trading 0.01% lower, Dow Jones (YM=F) futures were down 0.0.04%, and Nasdaq futures (NQ=F) were up 0.4%. US markets will also shutter early on Black Friday.
“There is always a certain weariness about European markets on Thanksgiving Day, knowing that they are almost certainly condemned to a directionless session with little volume and not much movement, and even when there is it is likely to be quickly unwound once the Americans get fully back in the saddle from Monday,” said Chris Beauchamp, chief market analyst at IG Group.
“Perhaps this year they will be thankful for the rest after the craziness of 2020 and all the volatility that has come with it. November has not been exactly quiet either, with stock markets finding their springboard to a fresh rally thanks to the election and vaccine news.”
He added that indices will continue drifting “without any real conviction” for the rest of the week.
Wall Street received a slew of weaker economic data on Wednesday, leaving the S&P and Dow Jones and Nasdaq in choppy waters during late day trading. The US Labour Department’s weekly jobless claims rose more than expected for a second week in a row, reflecting the hard impact coronavirus is still having on the economy.
The FOMC regarded current asset valuations as “moderate” as they related to low interest rates so the “immediate adjustments to the pace and composition of asset purchases were not necessary” but “they recognised that circumstances could shift to warrant such adjustments.”
“There was a more pertinent discussion of updating forward guidance on their bond-buying strategy “fairly soon,” ensuring that any additions in the Central Banks’ securities holdings would taper and end before the federal funds rate was raised,” said Deutsche Bank in a note on Thursday.
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COVID-19 cases in Europe appear to be easing while the US is still struggling to contain outbreaks. On Wednesday, France’s seven-day running tally of cases fell to its lowest levels since 9 October. Germany has decided to extend its partial lockdown for at least three more weeks.
In the US, daily cases in New York rose above 6,000 for the first time since April. California has also reported over 18,000 new cases, much higher than the 15,400 daily record from this past weekend.
In the UK, chancellor Rishi Sunak warned on Wednesday that the “economic emergency” caused by COVID-19 was only just beginning as he delivered the government’s spending review in parliament.
Sunak’s statement came as the Office for Budget Responsibility forecast that the UK economy will contract by 11.3% in 2020, the biggest fall in output in 300 years.
There is also no clear progress on Brexit, despite the transition period coming to an end in five weeks. In a speech to the European parliament on Wednesday, Commission president Ursula von der Leyen said that “I cannot tell you today, if in the end there will be a deal,” and although she said that there’d been “genuine progress” on a number of issues, stumbling blocks remain on the level-playing field, fisheries and governance.
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