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Oil prices pops nearly 6% after strikes in Norway disrupt supply

MARKETS

News that US President’s Trump could be released from hospital today and his highly criticised ‘drive by’ seems to have done the trick easing fears of election disruption.

Stocks pushed higher across Europe and Wall Street opened on a firm footing as investors bought last Friday’s dip amid the better news on the President’s health. A Trump tweet forcefully encouraging agreement on another US stimulus bill and better mood music from the Treasury and Congress added to risk-on moves.

The Energy complex led the move up in global stock markets thanks to a 5%+ jump in the oil price. A strike at some Norwegian oil platforms and UAE showing an 8% output drop in September came at just the right time to address over-supply fears. Oil prices hit the skids last week on chatter of non-compliance at OPEC and political uncertainty in the US. Weir Group jumped on news it had sold its oil and gas unit to Caterpillar for $405 million to focus on mining.

Cineworld shares were battered to the bottom of global markets. Cineworld losing over a third of its value in one day looks like an overreaction until you read managers describe their business as unviable. The Sunday Times reported the comments from a letter to the Prime Minister and Culture Secretary. The one-two punch of delayed blockbuster film releases and the debt burden leftover from the ill-timed purchase of Regal poses a real risk of knockout for Cineworld.

The dollar gave back all its Trump has COVID haven gains from Friday. Following its best month since March, the dollar has had a weaker start to the new quarter. The ongoing pullback in the buck helped gold extend its gains to a 2-week high. The soft payrolls report on Friday is  being viewed as part of plateau in the US economic rebound, which could spell more dollar-weakness.

The euro was bid higher on Monday despite disappointing service sector data. Pretty much every country across Europe has seen a drop-off in economic activity. It’s been expected that the rising virus cases and increasing number of local lockdowns would dent the speed of the recovery. Last month’s sell-off in risky currencies and the bid for the dollar was ahead of this PMI data and probably more like it heading into the winter. 

The pound was more subdued on Monday but Prime Minister Boris Johnson telling Andrew Marr that a Brexit deal is “there to be done” is keeping hopes alive.

 

DAY AHEAD

For the day ahead on Tuesday October 5th, there is an RBA rate decision, speeches from Powell and Lagarde as well as Trump's health and new lockdown restrictions.

RBA interest rate decision . A dovish pivot is being priced in from the RBA that opens the door to further easing at one of the coming meetings. That probably means another rate cut to 0.1% and more asset purchases.

Fed Chair Powell speaks tomorrow before minutes are released on Wednesday. Markets have been inundated with comments from Powell of late so its unlikely to be a big mover- especially with focus still on the fiscal side.

ECB President Lagarde will probably want to play down reports of a split of opinion in the ECB before the release of minutes from the last meeting on Thursday.

Trump’s health will be an ongoing source of uncertainty, though less so if he is released from hospital early. Doctors were debating his release Monday morning despite putting him on an unproven steroid drug usually reserved for severe cases.

New lockdown restrictions in New York and Paris were put to one side on Monday but could begin to hit market sentiment in the context of 35 million global cases.

23-10-2020

Bitcoin above 13k, Barclays Q3 results & flash PMIs
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… Read more

22-10-2020

Intel is selling off parts before Q3 results
The day ahead will see two US corporate behemoths Intel and Coca-Cola report Q3 results while the lack of US stimulus puts the spotlight on weekly jobless claims. European stocks look set for opening losses on Thursday with indices testing the lowest levels in… Read more

21-10-2020

No pre-earnings delirium for Tesla
The day ahead will see earnings from EV carmaker and retail options trading favourite Tesla and the UK reports inflation stats at a critical stage in EU/UK trade negotiations. This really feels like it's the last-chance saloon for a pre-election US stimulus bi… Read more

20-10-2020

Netflix earnings and stimulus deadline
MARKETSEuropean markets have opened lower following the late losses headed into the close on Wall Street. Stocks in Asia are mostly lower with the exception of China after the PBOC kept the LPR steady. Early optimism gave way to sweeping losses across stock ma… Read more

19-10-2020

48 hours for stimulus, China GDP grows
HEADLINESChina GDP grew 4.9% in the third quarter, slightly missing estimates Stocks are bouncing back from last week’s sell-off on hopes for US stimulus There could be a coronavirus stimulus bill within 48 hours and an emergency-use COVID-19 vaccine by Novemb… Read more

16-10-2020

Stricter COVID rules send stocks tumbling
MARKETSWall Street ends well off lows in wild tradingThe US equity benchmarks fell for a third day but by much narrower margins than mid-day losses would have implied. The Dow was down by over 300 points but bounced back to close just 20 points lower. Facebook… Read more

15-10-2020

US bank stocks getting clobbered
The British pound rallied (GBP>1.30) after the UK signalled it would not walk away from trade talks after today's EU Summit. Big US banks have seen shares turn lower after earnings results. The prospect of future loan losses and low interest rates are keepi… Read more

14-10-2020

Paused vaccine trials hit market optimism
Eli Lilly has put its antibody treatment for the coronavirus on hold after Johnson & Johnson paused its vaccine trials on Monday. The pauses stretch out the timeline for when investors should expect to see a vaccine approved. MARKETSEurope openEuropean mar… Read more