Negotiations and coronavirus weigh on markets

Negotiations and coronavirus weigh on markets 150 150 Realm

UK stocks opened down this morning, following US index futures lower. Optimisim that a stimulus package in the US was immininent is fading with Treasury Secretary Steven Mnuchin saying a deal before the November election would be difficult as both parties remain divided on key issues. Coronavirus concerns also remail heightened as infections continue to surge across Europe and further restrictions in the UK are expected. Regarding negotiations between the UK and the EU on their future relationship; it seems that talks might be extended beyond Prime Minister Boris Johnson’s October 15th deadline. 

 

Global Macro

  • New three-tier system of COVID-19 restrictions has begun in England, while several countries across Europe also imposed fresh restrictions to curb the spread of the pandemic. Early gains were supported by strong quarterly reports. Education group Pearson said it was on course to hit market expectations due to stronger demand for online learning, while online fashion retailer ASOS reported a quadrupling in full-year profit. Bunzl shares also rose after the company said it expected a slightly higher operating profit margin and stronger revenue growth in the second half of the year.
  • In the US. market sentiment was supported by stronger-than-expected earnings results from UnitedHealth, Bank of America, Goldman Sachs and Wells Fargo. Revenues from Bank of America, however, disappointed and Wells Fargo profit fell 56% last quarter. Meanwhile, Eli Lilly’s antibody treatment trial has been put on hold due to safety concerns.
  • On Wednesday: European stocks closed lower, weighed down by concerns over continued rise in virus cases, fresh lockdown restrictions and uncertainty about availability of Covid-19 vaccine anytime soon. Investors, looking ahead to the upcoming EU Summit for updates on Brexit, were also digesting corporate earnings reports and the latest batch of economic data. US stocks moved mostly lower over the course of the trading day, extending the pullback seen in the previous session. The major averages slid firmly into negative territory after showing a lack of direction in early trading.

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