European equity markets are up this morning, with the German index gaining 0.60 per cent on the day.
Market sentiment has improved over the weekend following reports that US President Trump´s condition is improving and that he might return to the White House as early as today.
Nevertheless, uncertainty remains as Trump received aggressive and experimental coronavirus treatment, which suggests his condition might have been worse than previously admitted.
Furthermore, there is the still risk that his health could deteriorate, which could cause some wild swings in markets.
Given a light economic calendar for this week, investors will be focused on US elections, the pandemic and on-going Brexit talks.
Europe has seen a sharp spike in new COVID-19 cases, and market participants are asking themselves for how long governments across the continent will tolerate this trend before they start introducing new and much tougher restrictions on daily life.
Along with political risks, this could dampen the market mood in the near-term as risk appetite decreases.
Progress in Brexit talks
Meanwhile, it appears that there has been some progress in Brexit talks, which have reached a critical phase. While several major hurdles remain, the recent phone call between UK Prime Minister Johnson and President of the European Commission von der Leyen sent some positive signals, and the British Pound continues to pare recent losses.
Nevertheless, GBP volatility is likely to remain at elevated levels in the coming weeks.