Morning Report – Thursday 29th October

Main Headlines

Germany and France have increased Coronavirus restrictions in an attempt to stem record high daily cases. France have imposed a one-month lockdown, almost equivalent to the one seen during the height of the pandemic while Germany have shut down parts of its economy.

Donald Trump’s chance of winning the US election in 5 days time is becoming increasingly unlikely. He is continuing to lose ground in swing states that are being hit by a third wave of Coronavirus, as his management of the virus is being questioned. A RealClearPolitics Poll has Biden up 3.6 points in Battleground states.

Restrictive Coronavirus measures and election uncertainty is contributing to a fall in global equities, especially in Europe. The FTSE 100 and Stoxx Europe 600 both dropped to their lowest level since April, while both the Dow Jones and S&P 500 fell 3.5% yesterday and reversed all of October’s gains.

GBP

Sterling is appreciating against both the euro and dollar in early morning trading. A study in England found that the virus is doubling every nine days, and this comes as the Government upgraded Bristol to Tier 1+ status, which focuses on people of working age. The day is light on the economic data front.

EUR

The euro is trading relatively flat against the dollar this morning. ECB President Christine Lagarde is set to speak this afternoon on the strength of the economy and whether it will be necessary to boost the ECB’s asset purchase programme in December or even earlier as the outlook for the economy is looking increasingly bleak.

USD

The dollar is trading relatively flat against most major currencies including the Japanese Yen in early morning trading today. Initial GDP numbers for Q3 will be released today, and this will be a good test as to whether a ‘V’ shaped recovery is possible, as touted by senior officials. The general consensus is that it will not, and more time is needed to get back to pre-pandemic levels.

Main Economic Data/Central Banks/Government

8:00 a.m.: Spain Oct. CPI
8:55 a.m.: Germany Oct. Unemployment
9:00 a.m.: Italy Oct. Consumer Confidence
9:30 a.m.: U.K. Sept. Mortgage Approvals
11:00 a.m.: Euro-Area Oct. Consumer Confidence
10:50 a.m.: Hungary one-week deposit rate
12:30 p.m.: U.S. Initial Jobless Claims, 3Q GDP
12:45 p.m.: ECB rate decision
2:00 p.m.: Germany Oct. CPI
1:30 p.m.: ECB’s Lagarde speaks
4:00 p.m.: ECB’s Villeroy speaks

EU leaders hold virtual summit