US stocks floundered overnight, pressured by a string of mixed earnings reports from a list of companies including airlines and banks.

The US congressional stalemate over fresh fiscal stimulus also pressured several assets as both Treasuries and the US dollar climbed while gold slid precipitously.

Anxiety over second wave resurgence of Covid-19, which is now apparent in many major economies, is also clouding the view where the question remains how activity curtailment measures feed through into economic and mobility activity.

On that front, risk has also deteriorated as participants mulled the implications of another vaccine trial setback, which sent shares lower and dented near term hopes for a cure.

Despite two major US banks reporting better profits, prices fell for both. Smaller than expected loan loss provisions drove earning beats, but gnarly forward guidance from both was cautious, reinforcing the overwhelming narrative still driving sentiment: all roads lead to pandemic uncertainty.

Markets are starting to feel listless as investors continue to digest the recent run-up in stocks and whether things have extended a little too far, too fast in the short term.

Tech exuberance should undoubtedly warrant some attention.

But I also think markets are drifting because the Biden-Trump markets probability spread has settled into a range. And investors may have finally caught up with pricing the chances of a Democratic sweep and the great “Blue Wave” fiscal gusher.

It feels like the easy money has been made in terms of the first leg of the pro-cyclical/fiscal Biden victory trade. The fast money, in particular, is now positioned long and with all roads leading to pandemic uncertainly, the short-term spec that was positioned for earning beats may have sold out to those lingering pandemic concerns.

Oil gains on China’s rising demand

China’s insatiable demand for all things oil has temporarily buttressed the oil complex after prices jumped on a better than expected import demand from China.

But China cannot carry this recovery alone, the US demand needs to kick in.

And while the data makes absolute sense, after all, China is the only massive oil-consuming economy that can boast any semblance of a V-shaped economic recovery.

Still, the recovery remains all too fragile, as reflected through gnarly news flow, where a resurgence of Covid-19 is now apparent in many major economies.

The question is how to control the spread and if broader restrictions feed through economic and mobility activity – and hence oil demand.

With coronavirus cases accelerating in many countries, OPEC faces a dilemma at their next policy meeting. Undoubtedly, the cartel will be contemplating the need to extend the current quotas into early 2021 rather than follow the scheduled ramp down of curtailments – this would help in normalizing global inventories.

I suspect this view is helping current prices but most certainly offers a good backstop on dips.

Equity and Oil markets analysis and insights from Stephen Innes, Chief Global Market Strategist at Axi