European markets followed last night’s poor show on Wall Street with a bad session for equities on Tuesday.
The FTSE 100 fell 0.3% to 5,866 while Germany’s DAX was down 0.6%. Investors increasingly seem to accept that today’s deadline for a pre-election US stimulus package will pass without an agreement.
Russ Mould, investment director at AJ Bell, said: “Investors on the UK market followed this year’s popular playbook by flocking to healthcare and consumer non-cyclical stocks, while turning their backs on energy and financials.
“With a backdrop of US elections, Brexit trade talks and expectations for tougher lockdown conditions again, it’s no wonder that markets are acting like a seesaw.
“One minute, optimism about economic recovery is high, the next it’s doom and gloom. Markets are overreacting to every data point, news update or speculation, meaning that prices are swinging up and down.
“The Vix index, which measures the market’s expectation of volatility, has been picking up in the past few weeks and it wouldn’t be surprising to see this upward trajectory sustained at least until the US election is concluded.”