Morning Report – Tuesday 22nd September

Main Headlines

US and European equities took a substantial hit yesterday due to rising COVID-19 cases and a general drop in sentiment. The S&P 500 index fell by more than 3% at one point before regaining some of its losses, and Oil prices also slumped as investors ran to safe haven assets, such as the dollar and ten-year treasury bonds.

The fallout from the ‘FinCEN’ leaks continued as both HSBC and Standard Chartered share prices fell to their lowest level since the mid-1990s. A group of investigative journalists allege that these banks, among others allowed illicit money to be transferred around the world with full knowledge that these funds were being taken illegally.

Chris Witty, the UK’s chief medical adviser warned of a “very challenging winter” on Monday. On its current trajectory, coronavirus cases in the UK could hit 50,000 by mid-October if no extra restrictions are implemented. This follows a global theme, as the US reported 20,000 new cases on Sunday and in Madrid, the 850,000 population were told to stay at home as new restrictions came into force on Monday.

GDP

The pound fell considerably against the dollar yesterday and the decline started when markets opened on Monday morning. The threat of a second lockdown, especially in London is very high and Boris Johnson is set to speak later today on the Coronavirus situation, and is expected to unveil some more measures to curb social interactions outside of work.

EUR

The euro fell against the dollar due to falling sentiment in the continents ability to keep the virus in check as COVID-19 cases have started picking up again. The risk to investors is that the high number of cases might force the ECB into a more dovish stance and further increase its Quantitative Easing programme.

USD

The dollar gained on all major currencies, except the Japanese Yen as investors are flocking to the dollar as a safe haven asset. There is still uncertainty in the US regarding US-China tensions and a weak coronavirus aid package, which was made worse still as Donald Trump announced that he will announce a new US Supreme Court Justice on Friday who, he emphasises, will be a woman.

Main Economic Data/Central Banks/Government
9:00 a.m.: Turkey Sep. Consumer Confidence
9:30 a.m.: Riksbank Rate Decision
9:30 a.m.: BOE’s Bailey speaks
10:00 a.m.: ECB’s Villeroy speaks
10:00 a.m.: Italy releases revised national accounts to 2019
2:00 p.m.: Hungary Rate Decision
2:00 p.m.: ECB’s Panetta speaks
4:00 p.m.: ECB’s Lane chairs panel
4:00 p.m.: Euro-Area Sep. Consumer Confidence