The UK stock-market was lower this week as concerns about the economic impact of new coronavirus restrictions across Europe mounted.
- Boris Johnson announced a three-tier system of further restrictions to be imposed on parts of England, including closing pubs and bars in areas placed into the “very high” alert level.
- The Bank of England warned the country’s commercial banks to prepare for possible negative interest rates, suggesting policymakers are seriously considering turning rates below zero for the first time in history.
- Brexit talks seemed to reach an end last week with Boris Johnson saying the UK should get ready to leave the EU with no trade deal in place although there seems to be optimism today (Monday) that talks, in some form, could be revived.
- On Friday, Moody’s Investors Service downgraded the United Kingdom’s sovereign credit rating to Aa3 from Aa2.
- Our Breadth Indicator stayed positive but our Momentum Indicator is negative and ticked lower again.
The US stock-market managed to recover from weakness earlier in the week to close on Friday up for the week.
- However, negotiations over a new stimulus package and concerns that US coronavirus cases are close to eight million continue to weigh on market sentiment.
- Optimism that a stimulus package in the US was imminent was fading by the end of the week with Treasury Secretary Steven Mnuchin saying a deal before the November election would be difficult as both parties remain divided on key issues.
- On the plus side, there was support from stronger-than-expected earnings from a number of major banks.
- Our Breadth Indicator stayed positive this week but our Momentum Indicator, although still positive, ticked down again.
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