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Europe lockdown intensifies, US Stocks down in anticipation of volatility as US Presidential Election draws near

Weekly Market Update 30 Oct 2020

1. The Dow Jones Industrial Average fell over 500 points before recovering from the lows by the end of market close. Investors are taking some risks off their books and gradually paring down their positions in anticipation of major market movements due to next week’s US Presidential Election

2. As expected, Euro dropped the most this week as the European Central Bank not only signalled an incoming easing but went one step further by announcing that all options are on the table. Despite better GDP numbers in the Eurozone, with Germany and France issuing nationwide lockdowns, investors worry of facing a steep contraction in the final quarter of the year

3. While all eyes will be on the US elections this coming week, there will also be 3 central bank meetings as well as labour reports. Markets expect the Federal Reserve and the Bank of England to maintain status quo on interest rates, and there are increasing expectations for the dovish Reserve Bank of Australia to opt for further easing. However, given that RBA’s meeting is scheduled on the night of the US Presidential Elections, this could be a factor in delaying any announcements as it might be lost amid market disruptions

Salzworth Asset Management