It's not taken long for sentiment to turn sour again in Europe, with stock markets once again heading south havibng been quite flat earlier in the day.
US futures aren't doing quite as badly but there's plenty of time to catch up if sentiment doesn't improve. The same old issues are holding these markets back, considerably economic and political uncertainty - particularly in the US - worring Covid trends in Europe and a lack of new fiscal and monetary support measures in Washington.
The election could increasingly become a point of concern for investors. It's already not going to be a normal election, with the votes taking much longer than normal to count. Add in the confusion that follows and the possibility of Trump contesting the result and it could get very messy, indeed. That must be playing on investors minds.
That would be a lot to take in normal times and we are not living through ordinary times. The election is taking place just as many countries will be in or heading for a potentially devastating second wave of Covid-19, forcing restrictions and maybe even more lockdowns that would be hugely damaging for the global economy. A vaccine can't come soon enough.
Oil being supported by Saudi warning
With risk appetite taking another beating this morning, oil is once again coming under pressure although, broadly speaking, it's pretty much barely moved since Monday's close. The sell-off earlier this week came as stock markets were falling aggressively on Covid and lockdown fears. Since then it's stabilized surprisingly well, or perhaps not so surprisingly.
When the Energy Minister of the most powerful OPEC+ nation is warning the market against shorting oil and suggesting they'll suffer the consequences, it has the potential to put a floor under the market. I think we're seeing those words take effect. Whether it lasts is another thing, the group may need to follow through on the threats eventually to be taken seriously and reinforce the floor he's attempted to put in place.
Gold has further to fall
Gold is slightly lower again this morning and heading back towards $1,850, around where it found support over the last 48 hours. The yellow metal is being pressured by a resurging dollar, which broke out of its downtrend in the middle of this month before stalling. It wasn't for long though and it's well and truly taken off this week.
To be clear, this only looks to be a corrective move at this stage but that doesn't mean we won't see $1,800 coming under pressure in gold in the not-too-distant future. The shift to a more risk-averse environment is favouring the dollar once again, at the expense of the once safe haven gold. Longer term prospects remain unchanged but in the near-term, the path of least resistance is below.