We are starting one the most crucial weeks of the year with US elections, Brexit negotiations, surge in corona virus and multiple economic releases including US jobs reports, BoE and Fed meetings scheduled to happen next few days.
U.S. stocks dropped, extending their worst weekly rout since March, after earnings from the biggest tech companies disappointed investors concerned that a slowing economy would damp profits on Friday. The yield on the 10-year Treasury rose to 0.86%, a level not seen since June, reverting early declines as investors sold off bonds even as stock indexes fell. This Monday markets have opened lower again with S&P 1.21% lower at 3,269.96, Nasdaq 2.45% at 10,911.59. Joe Biden maintains the lead over Donald Trump with election results to be announced on Wednesday. The delayed announcement of Fed is due on Thursday with officials expected to hold off stimulus measures, but keep the possibility of adjusting bond purchasing program in December. Jobs reports on Friday is expected to show another small decline in the unemployment.
European equities on Friday trimmed their worst monthly drop since the March turmoil as underwhelming results among U.S. technology giants added to concerns about new lockdowns and upcoming U.S. elections. The markets are seen opening lower on Monday with DAX 0.33% lower at 11,595.61, FTSE mostly flat and trading at 5,593.92. UK was the latest European country to announce lockdown measures this weekend with one- month restrictions to start this Thursday following similar course of action in France and Germany. Prime Minister Giuseppe Conte set to speak to parliament later Monday and is likely also to expand lockdown policies in Italy. The Brexit negotiations are to be continued with some progress on fishing rights seen this week.
Asian shares were higher this Monday helped by Chinese factory activity expanding at its fastest pace in a decade. MSCI’s broadest index climbed 0.36%, Japan’s Nikkei jumped 1.4%. Australian shares rose 0.4%.
Oil prices seen lower on Monday with US Crude futures traded 4.3% lower at $34.23 a barrel. Oil is trading on 5- month lows on lockdown threatening the demand, US election uncertainty and Libya increasing production.
Gold futures are higher at $1,884.25 and EURUSD is lower at 1.1641.
Russia: Most yields along the Russia local currency sovereign yield curve rose, with 3-year bonds moving the most in Friday afternoon trading. Ruble rate appear to reflect not just the macro picture today, but investors’ concerns about the fact that the future U.S. president may pursue a more aggressive external economic policy toward Russia.
Latam: In Brazil, the coming week brings Industrial output for September, that is likely to show the recovery from pre-pandemic is not complete, whereas October inflation should show continued food price pressures. The BCB may use the minutes of its last monetary policy meeting to clarify its intentions to markets. In Chile, data is likely to add evidence of a two-speed economy and activity slowly recovering but still below levels prior to the outbreak and a year earlier. Inflation is likely to reverse part of the sharp advance one month before and fall back below the midpoint of the 3.0% +/- 1 percentage point target, in line with expectations for pressure on prices to remain subdued.