Morning Report – Friday 4th September

Main Headlines

Global stocks slid after the S&P 500 wiped out this week’s gains on concern the lofty valuations of technology stocks can’t be sustained. U.S. futures signalled the retreat could extend for a second day ahead of a holiday weekend. Treasuries were steady. Oil fell and gold climbed.

The Fed’s demand for more government stimulus is growing louder, even as Congress shows little willingness to compromise on an aid package. Charles Evans echoed several of his colleagues in warning that an economic recovery will “critically depend on receiving substantial additional support from fiscal policy.”

France may extend the furlough program it created to protect jobs during the pandemic, Finance Minister Bruno Le Maire said, indicating the government is ready to spend more than the 100 billion euros in the stimulus plan announced yesterday. He also said he expects the economy to do a little better than the 11% GDP contraction that the government currently forecasts for this year.

GBP

The pound extended its falls against the dollar yesterday and was set for its biggest fall against the euro in three weeks, hit by a stronger dollar, bleak economic outlook and lack of progress in Brexit negotiations.

EUR

Data due today on German industrial orders could provide more clues about the health of the euro-zone economy. The euro has retreated in recent sessions following comments about its appreciation by ECB members.

USD

The dollar steadied against major currencies in early trade this morning as traders awaited key U.S. jobs data that will shed light on the strength of economic recovery from the coronavirus outbreak. The greenback has managed to halt its recent slide, but analysts warn sentiment remains weak due to concern about the strength of U.S. economic growth and speculation that the Federal Reserve will keep rates low for a very long time.

Main Economic Data/Central Banks/Government (All Times BST)

7:00 a.m.: Germany July factory orders
9:30 a.m.: U.K. Aug. construction PMI
10:25 a.m.: ECB’s Villeroy speaks
10:30 a.m.: BOE’s Saunders speaks
1:30 p.m.: U.S. Aug. jobs report
4:00 p.m.: ECB’s Lane chairs lecture
5:00 p.m.: Russia Aug. CPI