Markets subdued today with coronavirus worries the main focus

Markets subdued today with coronavirus worries the main focus 150 150 Realm

Markets remain focused on the coronavirus pandemic with the U.K. reporting its highest number of new coronavirus cases in a single day since the start of mass testing. On a more positive note, hopes for further stimulus in the US is also in focus with Democrats putting together a new proposal for negotiations with the White House.

 

Global Macro

  • The United Kingdom’s Gfk Consumer Confidence improved to -25 in September 2020 from -27 in the previous month, ahead of further lockdowns. Three subindices improved, one deteriorated and one stayed the same. The largest gains were seen in the general economic situation for the next 12 months (+4 to -38) and the major purchase index (+4 to -21). “Despite unfavourable double-dip economic headwinds and the threat of a second lockdown, we have seen an uptick for September as the Overall Index Score climbs to -25 from the near-historic low of -36 in our early June ‘flash’,” said Joe Staton, GfK’s Client Strategy Director.
  • The Kansas City Fed’s Manufacturing Production Index fell to +18 in September 2020, from the previous month’s near two-year high of +23, suggesting factory output increased at a slower pace and remained lower than a year ago. Food and beverage activity growth slowed from previous months, when activity bounced back more sharply. Meanwhile, shipments, new orders, and employment all rose at a slower pace, while order backlog and supplier delivery time increased. Looking ahead, expectations for future activity were positive, even as firms anticipated slightly lower wage and salary growth in the year ahead.
  • Sales of new single-family homes in the United States jumped 4.8 percent from the previous month to a seasonally adjusted annual rate of 1,011 thousand in August of 2020, surprising markets that were expecting a fall to 895 thousand. It is the highest reading since September of 2006 as the housing market continues to recover from the coronavirus hit, prompted by record low interest rates and increasing demand as people move away from the big cities. New home sales increased in the South (13.4 percent to 636 thousand) and the Northeast (5 percent to 42 thousand) but fell in the Midwest (-21.4 percent to 99 thousand after a 59.5 percent rise in July) and the West (-1.7 percent to 234 thousand). The average sales price went down to $369,000 from $392,700 a year earlier. The number of new houses for sale available on the market fell 3.1 percent to 282 thousand.
  • On Thursday: European stocks closed lower as worries about a second wave of coronavirus across the region and growing uncertainty about the pace of economic recovery rendered the mood bearish. Investors also digested the British government’s new plan that includes a new jobs support scheme, which is an extension to the self employment income support scheme. It also included a plan to cut VAT for the hospitality and tourism sectors. US stocks showed wild swings over the course of the trading day after ending the previous session sharply lower. The major averages spent the day bouncing back and forth across the unchanged line before closing modestly higher.

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