Morning Report – Thursday 24th September

Main Headlines

In a statement yesterday, Rishi Sunak cancelled the Autumn Budget in favour of immediate relief to businesses and to quell short term unemployment. The furlough scheme, running since March is set to end on the 31 October and Sunak is expected to extend four loan schemes which have already backed £58bn in lending to companies.

Donald Trump did not commit to a peaceful transfer of power when asked directly if ballots show that Biden has won the election in November. “We’re going to have to see what happens” was his response before going on to complain about the ballots. As a result, markets are in turmoil and will likely add to the heavy losses seen over the past week.

Multiple Federal Reserve officials stressed on Wednesday, the need for extra fiscal stimulus from the US Government. Markets are pessimistic that a stimulus will not be agreed, given the in-fighting in the Senate in the run-up to the US election and with the death of Ruth Bader Ginsburg. Chair Jerome Powell said yesterday that a fiscal stimulus was likely to be necessary, while Cleveland Fed President went further to say it was needed given the “deep hole” the economy is currently in.

GBP

PMI’s for September were very close to the forecasted level, so had very little effect on Sterling. The composite PMI slipped to 55.7, still well above the critical 50 mark but declined from 59.1 in August. The currency was dictated by falling sentiment in the country and struggled against the dollar but had moderate gains against the euro.

EUR

The euro traded at a similar level to its open before declining towards the end of the day yesterday. The composite PMI unexpectedly fell from 51.9 to 50.1 in September, which was far worse than analysts forecasted. However, this had little effect on the euro in the short run which might be due to Manufacturing numbers rising in the Eurozone, as well as France and Germany.

USD

The dollar continued to strengthen against most major countries yesterday. Global risk sentiment is still at a low and so equities are continuing to fall. Investors are finding relief in the dollar but are still exasperated by the lack of action from the Senate over a fiscal stimulus as well as growing fears over the US-election.

Main Economic Data/Central Banks/Government (All Times BST)
7:45 a.m.: France Sept. Manufacturing, Business Confidence
8:30 a.m.: SNB rate decision
9:00 a.m.: Norway rate decision
9:00 a.m.: Germany Sept. Ifo Survey
9:00 a.m.: ECB publishes economic bulletin
10:30 a.m.: ECB publishes results of TLTRO-III allotment
11:00 p.m.: U.K. Sept. CBI Retail Sales
11:30 p.m.: U.K. sells linkers
12:00 p.m.: Turkey rate decision
2:00 p.m.: ECB’s Lane Twitter Q&A
3:00 p.m.: BOE’s Bailey speaks

EU leaders’ summit