Morning Report – Wednesday 23rd September

Main Headlines

Boris Johnson announced last night a reversal of his plan for people to go back to their offices and said that they should work from home if they can. The Prime Minister stopped short of announcing a 2 week lockdown, but did say that tighter restrictions could last up to six months. Fines for breaking the rules will also increase to £200 for the first offence.

The US passed 200,000 COVID-19 deaths yesterday as Coronavirus cases continued to increase substantially. In Supreme Court news, Mitt Romney has said he would support holding a vote on Trump’s nominee. This should be enough for the nomination process to start in the Senate, where the Republican Party has a 53-47 majority.

Global stocks have risen somewhat since the large sell off seen on Monday. The S&P 500 is expected to rise this morning, although the NASDAQ 100 could slip further after disappointment from Tesla inc. Japan is coming back to work after a 2-day holiday extended their weekend, and equities in the country are expected to rise further as they enjoy the benefits of low Coronavirus cases.

GBP

Sterling continued its decline against the dollar yesterday as investors flock to the safe haven greenback. There was some relief when the Governor of the Bank of England, Andrew Bailey, made it clear that the Bank was not going to push interest rates below zero in the near future, but this was short lived.

EUR

The euro is struggling against most major currencies except the pound due to rising Coronavirus cases in the continent and a decline in sentiment. European Commission President Ursula Von der Leyen is set to unveil a new migration and asylum pact which comes with renewed urgency as the pandemic worsens.

USD

The dollar extended its gains from yesterday into today as the greenback retains its crown as the premium safe haven currency. There was some cause for concern as Fed Chair Powell said that the economy may need further support as it is a long way from recovery. Powell speaks again today on the central bank’s response to the virus, and investors will be watching out for any talk of an extended fiscal stimulus package.

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

7:00 a.m.: Germany Oct. consumer confidence
8:00 a.m.: Spain 2Q GDP
8:15 a.m.: France Sep. PMIs
8:30 a.m.: Germany Sep. PMIs
9:00 a.m.: Euro-Area Sep. PMIs
9:30 a.m.: U.K. Sep. PMIs
11:00 p.m.: ECB’s de Cos speaks
1:30 p.m.: Czech rate decision