Stocks get off to a positive start this week

Stocks get off to a positive start this week 150 150 Realm

UK and European stocks opened higher this Monday morning, bouncing back after a poor week when coronavirus worries dominated. This week the final Brexit talks begin today and on Tuesday the first presidential debate between Donald Trump and Joe Biden will take place.

 

Global Macro

  • The number of people infected with the Covid-19 in the United States surpassed 7 million late Friday afternoon, of which over 203 thousand have died. Globally the count of people with the virus crossed 32.3 million, with Europe facing a second wave of infections, in particular Spain (+12,272), France, the UK (6,873) and Germany (+2,153). In terms of fatalities, the US and Brazil continued to lead, followed by India, Mexico and the UK.
  • New orders for US manufactured durable goods rose 0.4 percent month-over-month in August of 2020, well below an upwardly revised 11.7 percent jump in July and lower than market forecasts of a 1.5 percent raise. Still, it was the 4th straight month of improvement in orders as the economy recovers from big plunges in March and April due to the coronavirus pandemic. Transportation (0.5 percent), machinery (1.5 percent), and computers and electronics (1.2 percent) led the increase while orders for electrical equipment and appliances ( 1.5 percent), motor vehicles (-21.7 percent) and defense capital goods (-3.3 percent) shrunk. Excluding transportation, new orders increased 0.4 percent and excluding defense, new orders rose 0.7 percent. Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, rose 1.8 percent, below 2.5 percent in July but above forecasts of 0.5 percent.
  • UK car manufacturing output fell 44.6 percent from a year earlier to 51,039 units August 2020, following a 20.8 percent drop in the previous month, as efforts to ramp up production stalled amid the coronavirus crisis, with weak demand in key overseas markets compounded by a significant fall in output for UK buyers. The performance also reflected an unusually strong August in 2019, when some plants worked through the customary summer maintenance shutdown period, instead pausing in April to mitigate the then possible ‘no deal’ Brexit on March 31st. So far this year UK car production tumbled 40.2 percent to 518 thousand units.
  • On Friday: 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 initially showed a lack of direction during trading. Buying interest emerged over the course of the session, however, leading to a sharply higher close by the major averages.

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