Election thriller and corona

For the month as a whole, the US S&P 500 Index fell by 2.7 per cent measured in USD, while the European Stoxx 600 Index dropped by 5.1 per cent measured in EUR and the Oslo Stock Exchange Benchmark Index sank by 5.2 per cent measured in NOK.

Towards a change?

The US election seems to be going in Joe Biden's favour (as at 5 November). However, it appears that the Senate majority will remain Republican. That means the tug-of-war over a new government support package for the economy will continue, which is negative for the financial markets. A change of president may improve the USA's trade relations with China. Biden may also create more certainty about international institutions like the WTO. However, first of all he has to win the election.

Outbreaks and growth momentum

After a period when society was reopened and there was partial control of the growth of infection, more and more countries have had to reintroduce strict infection-control measures. In Europe, countries like France, Spain and the UK are experiencing a particularly large increase in those infected. The introduction of new strict infection-control measures also affects economic growth. The record-high third-quarter GDP growth of 33 per cent (annualised) will probably not repeat itself when the fourth quarter is to be summarised.

Strong from China

While infection rates are increasing in Europe and parts of the US, they remain low in many Asian countries such as China, Japan, South Korea and Taiwan. That is positive. There has not been any fresh outbreak in China, where it all started, and the third-quarter GDP figures showed continued growth following the sharp upturn in the second quarter. Industrial production is now higher than it was before COVID-19, and even consumption, which has been weak without specific support, is now rising again. The outlook will be affected by the outcome of the US election and how trade relations develop.

The road ahead …

Following two weak months in the stock markets, the question now is whether we can expect a small share rally in the period leading up to Christmas. In the past, the stock markets have risen in the wake of a presidential election. Even with a large number of uncertainties, for example linked to a new government support package in the USA, it is tempting to believe that history will repeat itself.

"Everything in life is luck"
Donald Trump