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Macroscope | 3 factors financial markets should watch over the next six months
- The pace of vaccinations globally, the US Federal Reserve’s policy intentions and the UN climate change conference could all move markets
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As the midpoint of 2021 passes, three factors are likely to shape the investing future for the next six months and beyond.
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First, the global pace of vaccinations will determine the speed of the recovery. The US and Britain have led this race in the first half of the year, resulting in a robust domestic economic recovery so far. Europe and China have also accelerated their progress in recent weeks.
While vaccine hesitancy around the world could prevent these economies from reaching the 60-70 per cent rate that’s required for herd immunity, a higher level of vaccination, with effective testing and tracking programmes, should help contain the pandemic and support growth recovery.
One question is whether the highly transmissible Delta variant could threaten this recovery. It is becoming more dominant in Europe and the US, especially among those who are not vaccinated. But, at least for those who have been vaccinated, the rate and severity of infections are lower.
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Covid-19 Delta variant: how infectious it is and how it may ‘shift thinking’ on countries reopening
Covid-19 Delta variant: how infectious it is and how it may ‘shift thinking’ on countries reopening
Therefore, instead of just looking at infection numbers, governments will also need to take their signals from hospitalisation rates and deaths when setting lockdown policies.
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