Financial market research and analysis

The day ahead will see the reaction to the second and final US presidential debate as well as the release of October PMIs and Q3 earnings from British bank Barclays.

European stocks look set for cautiously higher open with the idea that the presidential debate won't have diminished chances of a new US stimulus bill. The approval of Remdesivir by the FDA as the first drug to treat COVID-19 is a big positive for markets beset by second wave concerns.

The standout market mover was Bitcoin, flying through the $13,000 handle – and seemingly moving to its own beat. Cryptocurrencies have been moving consistently higher this week – unaffected by the incessant stimulus on/off talk besetting other asset classes. PayPal allowing its users to store, pay and sell cryptocurrencies is, in the mind of crypto bulls, one more step towards mainstream use

Stock markets remain in a volatile holding pattern before the US election. Europe faces the extra hurdle of earnings season but there were glimmers of hope on Thursday. Having slumped 5% in early trading, shares of IAG – the owner of British Airways – took off – surging 10% to finish 5% higher. The turnaround fuelled a rally that put other airlines like EasyJet among the top gainers on the today.

MARKETS
Headlines
Remdesivir approved by FDA for COVID-19 treatment
Goldman Sachs to pay $3 billion to settle 1MDB charges
Adidas to sell Reebok brand within months
Pelosi ‘optimistic’ about stimulus talks
Senate approves Trump pick for Supreme Court over Democrat boycott
Positive surprise in US weekly jobless claims
Sunak extends UK job support in second wave

Market Moves
Bitcoin hits $13,000, gains $1000 this week after PayPal news
Ethereum, Bitcoin Cash reach 7-week high
Tesla shares pop 5% after 5th consecutive quarterly profit
Turkish lira hits fresh record low on surprise central bank move

DAY AHEAD
Presidential debate reaction
There are eight trading days left until the election result will/should be known and polls suggest Trump is trailing badly. This debate was a big moment that has come and gone and markets will respond if there is any change in opinion polls. The gap in the polls started widening after the first debate in Biden's favour. Investors responded positively- pricing in the prospect of a 'blue wave' and substantial near-term stimulus. If there is a clear ‘winner’ it will set the tone for how markets prepare for election night.

October Flash PMIs
The Eurozone recovery has hit a wall of new COVID-19 restrictions. The flash readings for October will be the first glimpse at how local lockdowns across the continent has affected economic activity. Manufacturing is holding up much better than services, which entail the hardest hit retail, travel and leisure categories. A really big downturn and investors will have to start reassessing the probability of a double dip. Poor numbers in Europe should hurt the euro unless data in the US begins to catch down but the focus on the US election and stimulus could limit any downside.

Barclays plc Q3 results
From the peak in June through the low in September, Barclays shares lost over a third of their value. They have recouped some of the losses though October and are holding above £100. There has been no love lost for the big banks in this crisis despite healthier balance sheets. That owes to expectations for huge loan losses due to the pandemic, the prospect of negative interest rates and an uncertain Brexit outcome. It’s unlikely Q3 will replicate the 83% rise in FICC trading revenue from Q2 but Barclays does have the benefit of its investment banking revenues to offset the woes in retail banking.