Astrazeneca and Oxford University announced that their coronavirus vaccine trials have resumed in the U.K. This should boost stocks this morning. A number of acquisition deals announced in the US will also help sentiment at the start of this week.
- The Fed’s monetary policy meeting will be keenly watched next week with all eyes on Chair Powell’s press conference for hints on new stimulus measures and details on the new average inflation target. On the data front, industrial production, retail sales, building permits and housing starts will also be in the spotlight. Elsewhere, the BoE and the BoJ will announce their interest rate decision, China will release industrial production, retail sales and fixed investment figures and the ruling Liberal Democratic Party in Japan will hold its leadership election with the new leader almost certainly becoming premier.
- The US budget deficit was at USD 200 billion in August of 2020, matching the gap in the corresponding month of the previous year, but lower than market expectations of a USD 245 billion shortfall. Receipts decreased to USD 223 billion from USD 228 billion a year earlier, while outlays in August were USD 423 billion, down from USD 428 billion a year earlier. The August deficit brought the fiscal year-to-date deficit to an all-time high of USD 3.007 trillion, nearly triple the USD 1.067 trillion shortfall for the comparable period of 2019, boosted by an increase in government spending to support the economic fallout from the COVID-19 outbreak.
- WTI crude traded around $37.3 a barrel and headed for its second weekly loss and the biggest since June amid a surprise rise in US crude inventories and mounting concerns that a spike in global coronavirus infections could stall fuel demand recovery. Data from the EIA showed US crude stockpiles rose by 2.032 million barrels in the latest week, in line with the API data which showed a build of 3 million barrels. Also, the US Senate rejection of new Republican stimulus bill weighed on sentiment.
- Consumer prices in the United States increased 0.4% month-over-month in August of 2020, following a 0.6% rise in July and beating market forecasts of 0.3%. Cost for used cars and trucks increased 5.4%, the most since March 1969 and made the largest upward contribution. Prices also increased for gasoline (2%), shelter (0.1%), recreation (0.7%), and household furnishings and operations (0.9%), the largest monthly increase since February 1991. The food index rose 0.1% after falling in July as an increase in the food away from home index more than offset a slight decline in the food at home index. On the other hand, prices for education went down 0.3%, the first fall ever, as many schools transitioned to remote learning because of the pandemic. Excluding food and energy, prices went up 0.4%
- CExports from the UK rose 1.2% from the previous month to GBP 50.22 billion in July of 2020, following an 11.3% rise in the previous month. Services exports advanced 3.5% while goods sales edged down 0.9%. Within goods, shipments dropped for chemicals (-12%) and material manufacturers (-3%) while those of fuels (12.9%), machinery & transport equipment (6.9%) and miscellaneous manufacturers (23.7%) increased. Goods sales were up to EU countries (1.1%) but fell to non-EU countries (-2.6%).
- On Friday: European stocks closed on a slightly positive note despite ongoing concerns about Brexit and continued surge in coronavirus cases in several parts of Europe. US stocks showed a lack of direction following the sharp pullback seen during the previous session. The major averages spent the day bouncing back and forth across the unchanged line. The choppy trading on Wall Street came as traders seemed reluctant to make significant moves following the substantial volatility seen over the past several sessions. Asian stocks ended mixed on Friday following the weak cues from Wall Street overnight as tech stocks resumed their decline after a one-day respite and U.S. lawmakers failed to reach agreement on a new coronavirus stimulus bill.
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