Stocks lower today after US tech sells off

Stocks lower today after US tech sells off 150 150 Realm

UK stocks opened lower this morning. Uncertainty over economic recovery is increasing as coronavirus cases continue to rise.

 

Global Macro

  • US crude oil stocks fell by 1.639 million barrels in the week ended September 18th, 2020, following a 4.389 million decrease in the previous period and compared to market expectations of a 2.325 million drop, according to the EIA Petroleum Status Report. Meantime, gasoline inventories were down by 4.025 million barrels, while markets had forecast a smaller 0.648 million decline.
  • The IHS Markit US Composite PMI stood at 54.4 in September 2020, remaining close to the previous month’s one and-ahalf-year high of 54.6 and signaling a further solid rise in business activity, a preliminary estimate showed. New orders increased the most since February 2019 and employment continued to grow. On the price front, average selling price inflation was the highest since October 2018, amid a sharp increase in cost burdens. Looking ahead, business confidence dropped to a four-month low due to election uncertainty and the ongoing pandemic.
  • The IHS Markit US Services PMI fell to 54.6 in September 2020 from a 17-month high of 55.0 in the previous month and slightly below market expectations of 54.7, a preliminary estimate showed. New business growth was the strongest for 18 months, with new business from abroad rising at a steep rate. Meanwhile, employment continued to increase solidly, albeit at a softer pace than in August following a slower upturn in backlogs of work. On the prices front, service providers increased their selling prices steeply in September alongside a sharp rise in cost burdens. Looking ahead, business confidence moderated amid election and COVID-19 uncertainty.
  • The IHS Markit/CIPS UK Services PMI dropped to 55.1 in September 2020, from an over five-year high of 58.8 in August and compared to market expectations of 56.0, a preliminary estimate showed. The latest reading signaled the weakest performance for the sector in three months and the first setback for the recovery since the turnaround began in May. Business activity growth was supported by stronger housing market conditions, rising demand for digital services and greater domestic tourism. However, large parts of the service economy continued to cite a severely negative impact on activity from the pandemic, especially those operating in transport services, international travel, hospitality and consumer-facing areas. Looking ahead, business confidence eased to a four-month low amid worries about renewed restrictions due to COVID-19
  • On Wednesday: European stocks closed higher amid hopes the central banks will announce additional stimulus sooner than later to boost economic recovery. Investors reacted positively to Federal Reserve Chairman Jerome Powell’s comments reiterating the central bank’s commitment to use all of its monetary policy tools for as long as necessary to support the economy. US stocks moved sharply lower over the course of the trading day, more than offsetting the strength seen in the previous session. With the drop on the day, the major averages ended the session at their lowest closing levels in well over a month.

Disclaimer:  ‘Where the business has expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. The information contained within this communication is believed to be reliable but Realm Investment Management Limited does not warrant its completeness or accuracy. This communication is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell investments.’