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Financial Markets Are Bouncing Back but Confidence Low in France and Germany

Advances in the search for a Covid vaccine and increased clarity over the US election results have helped to push many financial markets into positive numbers, although current studies show that business confidence has plunged in some European countries.

Details of the Market Situation

Renewed hope in the markets that the worst of the pandemic could be over has led to a series of recoveries in several sectors. The latest positive vaccine news from AstraZeneca encouraged traders, with one result being that the booming stock for Tesla has pushed Elon Musk into second-place in the list of the world’s richest people, now just behind Jeff Bezos.

Interestingly, one company that failed to increase its share price was AstraZeneca itself. The pharmaceutical company based in Oxford saw its price plummet despite their progress in the coronavirus vaccine. This appears to be due to worries that rival vaccines will be more effective, as well as a lack of clarity over how much the company could actually profit from the breakthrough. 

The cryptocurrency world has also showed big gains, with Bitcoin reaching over $19,000 for the first time in three years and possibly on course for its highest ever price. Yet, the price of gold fell sharply, perhaps in a sign that this traditional safe haven may no longer be as sought after in more optimistic times.

The Business Confidence Results

Despite these positive signs in the market, business confidence remains fragile in Europe, with many countries still in some form of lockdown and trying to get keep their businesses alive. As in the UK, some are using the debt collection process to make up for greatly reduced revenue this year.

In Germany, the latest reports from the IFO Institute point out that business morale has dropped to 90.7 points in November, which is down from 92.5 in the previous month. This was put down to the second wave of the coronavirus interrupting the country’s recovery from the damage done to the economy earlier in the year.

The worst hit sector was services, with hotels and others involved in the hospitality trade particularly badly affected by the current conditions. Confidence rose in the manufacturing industry but, overall, it is feared that the results suggest a contracting economy in the final quarter of 2020.

Across in France, business confidence was reported as hitting a five-month low. With the services sector locked down again, the level of morale in the business world collapsed, falling to 79 points from the previous figure of 92.

This is the lowest level seen since June. At the moment, the likes of hotels, food companies and car repair firms are among the least optimistic in France. The overall business outlook is bleak, but it is thought that France will start to lessen its Covid-19 restrictions in the next few weeks.

In Britain, workers have been encouraged to work from home until April of next year, leading to fears that companies in big cities that rely on heavy footfall will continue to suffer for several more months.