The disparity in lockdown measures and impact on local economy’s across different regions has caused friction with local leaders and the government, with local leaders concerned about the economic impact of further business closures on their region. Greater Manchester has secured a £60 million support package from the government for businesses affected by new coronavirus restrictions after mayor Andy Burnham hit back at the PM for placing Manchester in the higher risk category of tier 3.

Markets have so far reacted negatively to the new measures, with the FTSE posting its first weekly decline in over 3-weeks directly after the announcement of the new system. UK markets are seemingly reacting to each new announcement as it comes with the FTSE dropping each time a new tier 3 region is announced and the movement of London from a tier 1 to tier 2 causing investors to fret.

It remains to be seen whether this tiering system will be effective in slowing the spread of virus, investors are hopeful of some good news coming out of the UK, with the obvious Covid threat and Brexit uncertainty weighing heavy on their minds.

This sparks a signal for potential progress for a turnaround from last month when it was looking increasingly likely that neither side were confident in reaching a deal. This gives the market an increase in confidence that is much needed in the UK. Sterling climbed to the upper end of a tight trading range against the Dollar which continues to experience  pressure as the US Presidential elections edge closer.

The Bank of England has also released a comment saying that now is not the correct time for negative interest rates in the UK. Such a move could potentially damage the banking system because of reduced rates of return on investments and large depositors effectively having to pay the bank to hold funds. This news has added to UK market sentiment which is vital as we move towards the end of 2020.

A second term for Trump would mean he is able to consolidate his control over the government. Whilst a Biden clean sweep would likely see an increase in taxes and spending, with sentiment mixed over prospects for the Technology, Energy and Healthcare sectors. However, it is unlikely that we would see the shockwaves and changes some would expect from a Democratic government. Its important to remember that the huge fiscal and monetary stimulus since March has been the main reason why markets have been able to rally against a very bleak economic backdrop.

One of the biggest talking points for investors is whether a further stimulus package can be passed before the November election. With it now looking relatively unlikely, higher volatility is expected, especially in the lead up to the election result.

Most of this slowing can be attributed to the fact that medical professionals are now better equipped and more experienced in dealing with the virus. According to the Financial Times ‘’Since deaths began rising again in late summer, it has taken one month on average for them to reach one death per million people. In March the same ascent took one week.’’

As well as improved understanding and treatment, younger people make up a higher percentage of Covid cases and they experience lesser symptoms and a much higher recovery rate. This has been seen particularly in Universities across the UK, where the virus has been able to spread quickly around accommodations.

Although we have seen volatility in markets, we haven’t yet seen anything close to what we experienced in late February/March, with historic crashes following rising cases. Although still wary of any further spike in cases.

Its important to remember however that this does by no means mean the virus is under control, and with the colder weather proven to have an effect on the severity of Covid symptoms, we could yet see a surge in cases across Europe thus exposing financial markets to further stress.

The IMF predicts the economy will have grown by 2 per cent by the year’s end, representing a V-shaped recovery from the initial impact of the virus, meanwhile most western countries are set to see negative growth rates in the same period with a less sharp recovery projected.

China has been able to recover because they were essentially first in first out of the lockdowns: with previous experience around health scares, their lockdown was brutally effective and has meant they have avoided a second virus wave so far.

This recovery has been driven by Government support for the  the manufacturing sector, although lockdowns and recessions across the rest of the world mean exports of certain non-tech goods may be somewhat challenged. China has reported year on year growth in the third quarter, with China’s GDP increasing nearly 5% in Q3 this year.

As well as an economic pick-up, China now has four vaccine products in phase 3 trials, which is the last stage before approval for public use. They hope to gain an advantage on the US and their ‘America first’ policy with any successful vaccine by promising preferential access for countries across Asia, Africa and Latin America to further develop their ‘soft power’ initiative.