Autumn has once again ushered in volatility and a swift global equity market selloff. The S&P 500 dropped 3.5% on Wednesday, dragging other markets down with it, and has declined 7.6% since its all-time high on September 2. The discontent is primarily driven by:
• Lack of progress on another U.S. fiscal stimulus package. Some investors had been expecting a deal before the election on November 3, and now that seems off the table. There is scope for COVID-19 relief to pass later this year, during the “lame duck” session, or the legislation could be stalled until after the January 20 presidential inauguration.
• The resumption of COVID-19 lockdowns due to the spike in infections. France and Germany simultaneously announced national quarantines, although less harsh than last spring. By some measures, France’s second wave is feared to be more serious than the first. In the U.S. and Canada, infections continue to climb, sparking renewed concerns that restrictions on business activity may ramp back up in some regions of North America.
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