German and French consumer confidence worsen; oil rally stalls – business live

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

It’s been a good week/month for markets. The Dow Jones closed above 30,000 for the first time ever on Tuesday, and other major stock markets also recorded chunky gains. Traders in New York wore “Dow 30,000” baseball caps to mark that moment.

Markets have been boosted by hopes of a return to normal life after positive results from three coronavirus vaccines in as many weeks, as well as hopes of further fiscal stimulus in the US after Joe Biden’s victory (although he is hamstrung by a Senate with a Republican majority).

After the global stock market rally fizzled out yesterday, Asian shares have risen again today, with Japan’s Nikkei up 0.9% and Hong Kong’s Hang Seng gaining 0.39%.

But despite the optimism over vaccines, the reality is stark, with Covid-19 infections rising around the globe. South Korea has reported the highest daily cases since March.

US jobless claims were higher than expected yesterday: 778,000 workers made claims for jobless benefits last week. Investors are betting that this means that interest rates will stay ultra-low for longer. The data was released early because of the Thanksgiving Holiday in the US today.

In the UK, the chancellor, Rishi Sunak, announced yesterday that the government would borrow almost £400bn this year – a peacetime record – as it battles the worst recession in more than 300 years.

Presenting his one-year spending review (the spending review is usually for three years but these aren’t normal times), he said the UK faced an “economic emergency” that required a public sector pay freeze for millions and a cut in the overseas aid budget. The Institute for Fiscal Studies will publish its analysis of the spending review later this morning.

German consumer confidence, out just now, has come in worse than expected at -6.7 in November versus expectations of a -5 reading, and down from -3.2 the month before. The tighter Covid-19 restrictions and rise in infections are weighing on consumer morale.

The German chancellor, Angela Merkel, and the country’s 16 state governors have agreed to extend the partial shutdown well into December, in an effort to reduce the rate of Covid-19 infections ahead Christmas. (More in our coronavirus live blog)

GfK notes that while shops have been kept open, the closure of restaurants, bars and hotels clouded consumers’ mood. GfK consumer expert Rolf Bürkl explains:

The hopes for a rapid recovery that arose in early summer have definitely been dashed. Only a noticeable decrease in infections and a relaxation of restrictions will bring more optimism again.

Business morale also worsened in November, suggesting that the economy will shrink in the fourth quarter because of the new lockdown, the Ifo institute said on Tuesday.