Capital goes to emerging markets

In November, foreign investors financed a record $76.5 billion into emerging markets portfolios amid positive news about the COVID-19 vaccine and the obvious normalization of the U.S. transition of power, according to a report by the Institute of International Finance.

Around $39.8 billion was invested in emerging markets equities, which is the second largest monthly cash inflow to this asset class that has ever been on record, where China’s earning is around $7.9 billion. With the improvement of macrostatistics in Europe and the United States, there will be the distribution of this capital. We recommend traders to keep track of the recovery of the economies of Europe and the United States and make decisions on buying currencies based on macrostatistics.

Yesterday, a group of Republicans and Democrats in the US Congress presented a common project of additional support for the economy in relation to the pandemic for $908 billion. The project allocates $180 billion for unemployment insurance and $288 billion to help small businesses, as well as billions of dollars to support transportation, cities, schools, and postal service. It is planned to allocate $16 billion for the development of vaccines against COVID-19.

According to the latest Reuters poll of analysts, 35% of them believe that the UK and the EU will not be able to reach an agreement on trade after Brexit, while most believe that it will take at least two years for the economy to reach levels before COVID-19. If the EU and the UK fail to sign the agreement, it can negatively influence GBP. Traders should follow the negotiations between countries and make decisions on the GBP and EUR trading based on the results.

Last week, the US oil reserves rose sharply, the data from the American Petroleum Institute (API) showed on Tuesday. Correction of WTI oil is expected to the level of 43.50.

Market indicators

The S&P 500 and Nasdaq indices closed Tuesday trading at record highs, the Dow Jones closed with growth by 0.63% to 29.823.92 points, the S&P 500 – by 1.13% to 3.662.45 points. The Nasdaq increased by 1.28% to 12.355.106 points.

The dollar index maintains a downward trend and is trading at 91.12.

The 10-year government bond yield rose on investor expectations on vaccinations and subsequent economic recovery. At the moment, the yield is 0.92%.

It is worth paying attention to the news feed today. At this time, we recommend traders to be careful when making transactions due to the increased volatility.

• – ADP United States Nonfarm Employment Change at 15:15 (GMT + 2);
• – Speech by the Federal Reserve System Chairman Powell at 17:00 (GMT + 2);
• – US crude oil stocks at 17:30 (GMT + 2).

by JustMarkets, 2020.12.02

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.