Stocks open flat ahead of US third quarter earnings

Stocks open flat ahead of US third quarter earnings 150 150 Realm

UK stocks opened flat this morning ahead of third-quarter earnings season in the US which kicks off today with a number of major banks reporting. On Monday, Prime Minister Boris Johnson announced a three-tier system of further restrictions to be imposed on parts of England, including closing pubs and bars in areas placed into the “very high” alert level.

 

Global Macro

  • Wall Street closed deeply in the green following its best week since August, as the tech sector booked its best day in a month and investors brace for the 3Q earnings season. Shares of Apple jumped 6% as investors looked ahead to its Tuesday event, where the company is expected to unveil its first 5G iPhone. On the policy front, in a letter to Democrats, Speaker Nancy Pelosi underscored what she said were insufficient offers on healthcare aid. Meanwhile, Treasury Secretary Steven Mnuchin and White house Chief of Staff Mark Meadows urged a separate vote on the Paycheck Protection Program in a letter to Congress. The Dow Jones added 251 points or 0.9% to 28,838. The S&P 500 climbed 57 points or 1.6% to 3534. The Nasdaq jumped 296 points or 2.6% to 11,876.
  • The British pound held above $1.30, hitting its strongest level since September 8th, as informal Brexit talks resumed in Brussels ahead of Thursday’s EU summit, which was the deadline set by Prime Minister Boris Johnson for agreeing a trade deal. Meanwhile, Britain’s government announced a three-tier system of local lockdown measures in England, including closing pubs and bars in areas placed into the “very high” alert level. On the monetary policy front, the Bank of England warned the country’s commercial banks to prepare for possible negative interest rates, suggesting policymakers are seriously considering turning rates below zero for the first time in history.
  • Gold prices remained above the key $1,900 level as investors continued to follow developments over another round of coronavirus-related fiscal stimulus in Washington. The precious metal also benefited from a weaker dollar and uncertainty surrounding the outcome of the upcoming election. Looking ahead, despite some correction from August’s record highs the fundamentals for gold have not changed, with expectations of a prolonged period of ultra-low interest rates and currency debasement remaining the main driver.
  • The Bank of England signaled it was seriously considering slashing interest rates below zero for the first time in history after it asked commercial banks whether they were prepared for the possibility of negative interest rates. On the corporate front, AstraZeneca Plc shares rose after the drugmaker struck a $486 million deal with the US government to develop and secure supplies of COVID-19 antibody treatment, while IAG stocks fell after British Airways Chairman and CEO Alex Cruz stepped down as the airline’s chief executive. Meanwhile, investors will continue to monitor Brexit negotiations
  • On Monday: European stocks closed mostly higher, as investors picked up stocks amid optimism about a fiscal stimulus in the U.S., and encouraging economic data out of China. Worries about a surge in coronavirus cases across the continent weighed on stocks and limited their upside. US stocks moved sharply higher during trading on, extending the strong upward move seen over the past few sessions. The continued advance once again lifted the major averages to their best closing levels in over a month.

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