Morning Report – Thursday 1st October

Main Headlines

The stock market was initially down yesterday morning as investors tried to absorb the chaotic Presidential debate, but rebounded later in the day when Steve Mnuchin suggested that a compromise over the fiscal stimulus bill could be made. The S&P 500 climbed over 1.5% at one point yesterday.

Boris Johnson, in his press conference yesterday afternoon, said that more Coronavirus restrictions could be implemented if the number of cases continues to climb. Many Conservative MPs are worried that further restrictions could have a long term damaging effect on the economy, and the Prime Minister had to quell a rebellion of around 60 MPs by making COVID related compromises.

Senior Republican figures have been distancing themselves from Donald Trump after his aggressive debate performance on Tuesday night. Mitch McConnell, Lindsey Graham and Mitt Romney all took umbrage with Trump for not condemning white supremacists, while the ‘Proud Boys’ exulted in their instructions to “stand by”.

GBP

Sterling ended the day higher yesterday and continued its gains earlier this morning. The first day of the EU summit is today, and the consensus is that the UK will get a deal with the EU at the eleventh hour. A report from EY said financial services firms have shifted £1.2 trillion worth of assets and 7,500 employees out of the UK ahead of Brexit.

EUR

The euro traded relatively flat against the dollar yesterday and has gained strength in overnight trading. Angela Merkel is in the spotlight after Germany’s unprecedented spending levels, and she will most likely attempt to bridge differences between members in order to unlock the bloc’s 1.8 trillion-euro recovery package.

USD

The dollar gained against most major currencies in early morning trade. Last night, house leaders postponed a vote on the Democrat led stimulus bill to give Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi one more day to negotiate a compromise pandemic relief package. If the stimulus bill is passed, the value of the dollar will likely fall as investors will look at risk-on assets.

Main Economic Data/Central Banks/Government (All times BST)
7:00 a.m.: Russia Sept. Manufacturing PMI
7:30 a.m.: Switzerland Sept. Inflation, Aug. Retail Sales
8:00 a.m.: Poland Sept. Manufacturing PMI
8:00 a.m.: Turkey Sept. Manufacturing PMI
8:00 a.m.: ECB’s Hernandez de Cos speaks
8:15 a.m.: Spain Sept. Manufacturing PMI
8:30 a.m.: Switzerland Sept. Manufacturing PMI
8:30 a.m.: Riksbank meeting minutes released
8:45 a.m.: Italy Sept. Manufacturing PMI
9:00 a.m.: Italy Aug. Unemployment
9:00 a.m.: Poland Sept. Inflation
10:00 a.m.: Euro-area Aug. Unemployment
11:20 p.m.: BOE’s Haldane speaks
4:45 p.m.: ECB’s Lane speaks

EU summit kicks off in Brussels (Day 1 of 2)
New EU Trade Commissioner Valdis Dombrovskis faces confirmation hearing