Morning Report

Morning Report – Thursday 27th August

Main Headlines

British car production rose sharply in July but is still well below last year’s level after manufacturing almost completely stopped in April at the start of the coronavirus lockdown, industry figures showed today. A total of 85,696 cars were manufactured in Britain in July, 51% more than in June but 21% fewer than in July last year, the Society of Motor Manufacturers and Traders (SMMT) said.

Britain’s services firms haemorrhaged jobs in the three months to August, a survey showed in the latest sign of mounting unemployment as the government’s coronavirus job protection scheme is wound down. Companies reliant on spending by consumers – many of which only reopened in recent weeks after the lockdown – cut jobs at the fastest pace on record, according to a survey published on Thursday by the Confederation of British Industry. Companies expected job losses to slow slightly in the next three months but the CBI said government action was urgently needed.

A rally that pushed global equities to a record stalled overnight ahead of a speech from Federal Reserve Chair Jerome Powell on a monetary policy framework review. Treasuries edged higher. Asian stocks traded mixed, with Japan, South Korea and Hong Kong declining, while China posted modest gains. U.S. futures dipped while Europe’s were flat. A surge in technology shares earlier pushed the S&P 500 index and the Nasdaq Composite to fresh highs for a fourth straight day. Oil remained near a five-month high ahead of expected disruption from Hurricane Laura, which is set to slam ashore Thursday morning. The offshore yuan traded at around the highest since January amid signs of tight liquidity.


The pound held firm against the U.S. dollar overnight and is trading close to two year highs. There was also a small rally versus the euro as Brexit uncertainty kept traders on the side-lines. This week’s biggest scheduled event for sterling is Bank of England Governor Andrew Bailey’s speech at Jackson Hole later today.


The euro continues to be driven by dollar news and is rangebound ahead of the Federal Reserve Economic Symposium which is taking place over the next two days.


The dollar traded near weekly lows overnight as investors looked for hints from Federal Reserve Chairman Jerome Powell that the central bank might tweak its policy framework to help push up inflation. Powell is scheduled to address the Fed’s annual central bankers’ conference later in the day, usually held in Jackson Hole, Wyoming, but being conducted virtually this year because of the COVID-19 pandemic. Investors are betting the U.S. central bank will introduce a new policy framework to fight persistently low inflation as early as next month.

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

9:00 a.m.: Italy Industrial Sales
1:30 p.m.: US Weekly Jobless Claims
3:00 p.m.: US Pending Home Sales