UK and European stocks have started the week on a down note with coronavirus cases across Europe still rising. The Director General of the World Health Organisation said that countries in the northern hemisphere have reached a “dangerous moment”. A new stimulus deal is yet to be agreed in the US and Brexit negotiations continue.
The number of COVID-19 cases confirmed globally has been reaching daily record highs for three days in a row, according to data from the World Health Organisation (WHO). The number of coronavirus cases around the world has now exceeded 42 million, of which more than 1.1 million died while near 29 million recovered.
US stock index futures slipped on Sunday night as investors monitored a record rise in coronavirus cases domestically. White House chief of staff Mark Meadows suggested during an interview on CNN that the country could not get control of the pandemic following a recent surge in new infections. Market participants now brace for a GDP report, while US earnings season will kick into higher gear, as several big tech-names report their quarterly results. The first look at third quarter GDP is due on Thursday, while Apple, Facebook, Alphabet and Amazon are expected to report results later this week.
On the economic data front, latest figures showed retail sales in the UK rose 1.5% over a month earlier in September, beating market expectations and taking total sales volumes to 5.5% above their level before the pandemic. Meanwhile, PMI data showed British private sector grew at the softest pace in four months in October, as both services and manufacturing output growth slowed. On the coronavirus side, Europe crossed the 200K daily coronavirus infections for the first time on Thursday but Gilead Sciences received US FDA approval for its antiviral therapy.
The dollar index ended lower around 92.8 on Friday as investors digest the latest presidential debate and stimulus talks. Joe Biden and Donald Trump had the last debate before the presidential election on Thursday and the Democrat continues to lead the polls. Meanwhile, House Speaker Nancy Pelosi signaled optimism that a stimulus bill can be approved, but she also admitted that it may take a while for legislation to be written and signed. Meanwhile, Treasury Secretary Mnuchin said “We’ve offered compromises, The speaker, on a number of issues, is still dug in. If she wants to compromise, there will be a deal”. Yet, a fresh coronavirus aid bill before the election on November 3rd seems unlikely. On the week, the dollar lost 1%. The dollar has been weakening since mid-May and is down near 5% on the year amid rising optimism about the global economic recovery, especially a robust rebound in China.
On Friday: European stocks closed on a bright note, riding on some encouraging earnings reports and mild optimism about U.S. fiscal stimulus sometime in the foreseeable future. European Union and British negotiators will meet today for intensive negotiations on a last-minute trade deal that could stave off a tumultuous finale to the five-year-old Brexit crisis. US stocks showed a lack of direction over the course of the trading day, with the major averages bouncing back and forth across the unchanged line before eventually ending the day mixed.
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