20201023 Weekly Market Update

US Stimulus Bill Numbness and ECB with COVID-19 resurgence

Weekly Market Update 23 Oct 2020

1. US House Speaker Pelosi sparked optimism with a declaration that a stimulus package can be passed if President Trump supports it. This is in stark contrast to Treasury Secretary Mnuchin’s view that there are still ‘significant differences”. Equities are still sensitive to stimulus news, but the FX market appears to be gradually disregarding speculation on the progress of the stimulus.

2. Germany’s manufacturing PMI index rose, which helped pare decline in the services PMI. Moving to the new week, focus will be on the European Central Bank, as there are expectations of an easing in monetary policy. Investors appear to be less concerned even as the resurgence of COVID-19 appears to be quickly getting out of control and this may be due to the preference of governments imposing regional restrictions and curfews than a full nationwide lockdown

3. In the UK, while retail sales showed improvement, both service and manufacturing activity slowed, keeping Sterling under pressure. The importance of UK PMIs is underscored by the fact that the Brexit negotiations do not appear to conclude anytime soon

Salzworth Asset Management