With the U.S. election closing in, the markets are increasingly pricing in the likelihood of a Joe Biden win in November. The main things to watch this week are earnings from the financial sector and Friday’s U.S. retail sales report. Emerging markets continue to perform comparatively better than developed markets as they have for the past several weeks.
This has been a stimulus-driven market for more than a year now and another multi-trillion dollar package could very push stocks back towards all-time highs. Fresh coronavirus outbreaks are also adding to Eurozone uncertainty. The rally in the dollar index appears to have fizzled out in the near-term.
U.S. stocks have posted gains over the past few trading days, but I think it’s safe to say that overall sentiment is cautious, if not still bearish. Evidence of a slowdown in the global economic recovery caused investors to abandon riskier assets over the past week, especially emerging markets equities.