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Commentary on financial market developments – November 2020


  • USA: Presidential election
  • covid-19 vaccine


The main drivers of stock prices in November were the US election and the announcement of the successful development of the covid-19 vaccine. The major stock indices posted more than destip percent gains, with the exception of China’s main index, the Shanghai Composite, which firmed “only” by +5.4%. Gold once again proved its negative correlation to equities, writing off -5.4%. Oil prices benefited the most from the positive sentiment and expectations of a global economic recovery, firming by more than a quarter.

The eagerly awaited US presidential election ended with Joe Biden’s victory. Defending President Donald Trump lost because he failed to hold on to key ‘rust belt’ states such as Michigan and Wisconsin. In the end, the overall results were not that close, with Joe Biden winning 306 to 232 on the number of electors won over Donald Trump. But in a few specific states, the results were very close in the tens of percentages. In addition, when the results were tallied, the votes cast by absentee ballots and from smaller precincts were the first to show up. Thus, Donald Trump was winning, but as the counted postal votes came in, the election began to turn. Donald Trump refused to accept the result of the election and did not congratulate his opponent. On the contrary, his legal team filed several lawsuits and requests for recounts in some states. So far, however, without success. Thus, the situation is gradually stabilising and it is clear that Joe Biden will become the 46th head of state. For the stock markets in the short term, it is not so important who won, but that there was not a closer result in which tensions in American society threatened to escalate. Nevertheless, the American public remains very divided and there is a huge gulf between the two camps, the Democrats and the Republicans.

The announcement of the successful completion of the development of the covid-19 vaccine had an even more profound impact on the financial markets. Then the US biotech firm Moderna joined in with equally positive news. The Russian authorities say the Russian vaccine Sputnik V, which will be produced in India, has similar results. Given that the virus has not yet been tamed, but is instead returning in waves as measures are relaxed or tightened, investors’ eyes are on vaccination. This, if truly successful (effective and safe), would bring much-needed calm back into the world economy, helping the global economy to get back on its feet. In the current situation, there is too much systematic risk in business that companies cannot defend against, never knowing when and what measures will hit their business.

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