Morning Report – Tuesday 29th September

Main Headlines

US Democrats unveiled a new stimulus package worth $2.2 trillion on Monday. The package is less than the $2.4 trillion previously suggested but over $1.5 trillion which President Trump said is the maximum he would accept. The Senate will enter into negotiations and it is unclear whether the new stimulus will be “dead on arrival”.

COVID-19 global deaths hit 1 million over the weekend, it has been reported. The virus shows no signs of slowing as cases have begun to grow in Europe and North America as they enter into flu season. In Madrid, where part of the city is already in lockdown, some senior officials are calling for even tighter restrictions.

Equities rebounded significantly on Monday, as the Dow Jones and S&P 500 gained by more than 1.8%. The uptick halts several turbulent weeks where stocks have been falling amid falling global sentiment. European stocks also rallied, although not to the same degree as investors are still worried about the state of the Coronavirus pandemic on the continent.

GBP

Sterling gained against most major currencies yesterday, including the dollar as markets became more optimistic that a successful Brexit deal will be reached this week. Bank of England Deputy Governor Dave Ramadan also contributed to the gain by going on record to state he was strongly against negative rates.

EUR

The euro also gained against the dollar but lost out against the pound. Risk sentiment in the eurozone is still shaky, however the euro benefitted from bad news out of the US. Christine Lagarde, European Central Bank president, said yesterday that the eurozone is likely to remain in deflation over the coming months.

USD

The dollar fell against most major currencies as investors are becoming more bullish and moving their money into riskier currencies. There was also negative news coming out of the weekend, as markets believe that the fiscal stimulus bill is too large to be accepted by the majority Republican senate. All eyes will be on the first televised US Presidential debate tonight, hosted by Fox News which might affect the market if there is seen to be a clear winner and loser.

Main Economic Data/Central Banks/Government (All Times BST)
7:45 a.m.: France Sep. consumer confidence
8:00 a.m.: Spain Sep. inflation
8:00 a.m.: Spain Aug. retail sales
9:00 a.m.: SARB Quarterly Bulletin
9:30 a.m.: U.K. Aug. mortgage approvals
10:00 a.m.: Euro-area Sep. economic confidence
10:30 a.m.: South Africa unemployment
1:00 p.m.: Germany Sep. inflation
3:00 p.m.: BOE’s Bailey speaks

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