Stocks try to stabilise today after sell-off on Monday

Stocks try to stabilise today after sell-off on Monday 150 150 Realm

UK stocks are trying to stabilise this morning after Wall Street recovered some ground late in the day following a large sell-off early on Monday. Increasing worries about a surge in coronavirus and fears of further restrictions hit sentiment along with media reports that several global banks have allegedly been moving large sums of illicit funds over the last two decades.

 

Global Macro

  • The Chicago Fed National Activity Index in the US dropped to +0.79 in August 2020 from an upwardly revised +2.54 in the previous month, missing market expectations of +1.95. Two of the four broad categories of indicators used to construct the index made positive contributions in August, but all four categories decreased from July. Production-related indicators contributed +0.23 to the CFNAI, down from +1.26 in July; and employment-related indicators contributed +0.63, compared to +0.65. At the same time, the contribution of the sales, orders, and inventories category to the index moved down to -0.04 in August from +0.53 in July; while the contribution of the personal consumption and housing category declined to -0.04 from +0.09.
  • Brent crude recovered on Tuesday after dipping near $40 a barrel in the prior session as Tropical Storm Beta disrupted crude production and refining in the US. Still, persistent worries that demand would recover more slowly than expected from the impact of coronavirus and a potential resumption of Libya’s production put pressure on prices.
  • Gold remained under pressure on Tuesday, hovering around $1,900 an ounce, weighed down by a stronger dollar and possible delays in fresh fiscal aid. Gold prices are now down nearly 10% from a record high of $2,075 an ounce hit on August 6 amid a lack of further stimulus from the Fed and the US government, but expectations of a prolonged period of ultra-low interest rates put a floor under prices Silver fell below $24 an ounce this week as a lack of further stimulus from the Fed, and the US government drove the white metal to levels not seen since early-August. Still, lingering concerns over the economic recovery from the coronavirus pandemic and expectations of a prolonged period of ultra-low interest rates put a floor under prices.
  • On Monday: European stocks fell heavily, reeling under a severe bout of selling pressure amid rising worries about a surge in coronavirus cases across several parts of the region, and fears of widespread lockdown measures. England’s chief medical officer Whitty has reportedly warned the rate of COVID-19 infections in the UK is “heading in the wrong direction” and the country is in a “critical point” in the pandemic. US stocks plunged sharply but regained substantial portion of lost ground in the final hour and the tech-laden Nasdaq very nearly managed to move into into positive territory towards the closing minutes of the session.

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