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Weekly Market Report

27 Oct 2020

27 October 2020


The Market Last Week

Global equities ended mostly lower last week, as resurgence in coronavirus cases worldwide renewed concerns over post-pandemic global economic recovery.

UK Markets ended the week in negative territory, amid worries over rising prospects of tougher coronavirus-led restrictions in Britain and uncertainties surrounding the Brexit deal.

UK’s consumer price inflation accelerated in September.

In the UK, the retail price index advanced in September.

UK’s retail sales grew for a fifth consecutive month in September.

In the UK, the flash Markit manufacturing PMI fell less-than-expected in October.

UK’s CBI balance of firms reporting total order book above normal advanced more than market forecast in October.

In the UK, public sector net borrowing deficit widened to its highest level since 1960 in September.

UK’s non-seasonally adjusted output producer price index (PPI) dropped in September.

In the UK, the DCLG house price index rose less than market consensus in August.

UK’s preliminary Markit services PMI dropped more than market forecast in October.

The GfK consumer confidence index in the UK dropped in October.

European Markets ended the week on a negative footing, amid concerns over rising coronavirus cases and renewed coronavirus-led lockdown restrictions in several regions.

In the Eurozone, construction output rose at a faster pace in August.

Eurozone’s seasonally adjusted current account surplus widened in August.

In the Eurozone, the flash Markit manufacturing PMI unexpectedly advanced in October.

Eurozone’s consumer confidence index fell to a five-month low in October.

In the Eurozone, the preliminary Markit services PMI declined more than market expectations in October.

In Germany, the PPI dropped less than market forecast in September.

Germany’s preliminary Markit manufacturing PMI unexpectedly rose in October.

In Germany, the flash Markit services PMI fell in October.

Germany’s GfK consumer confidence index eased in November.

US Markets ended the week in red, amid speculation that the coronavirus relief package would not be finalised before the November presidential elections.

US NAHB housing market index unexpectedly advanced to a record high level in October.

In the US, building permits climbed to its highest level since March 2007 in September.

The number of initial jobless claims unexpectedly dropped on a weekly basis in the week ended 16 October 2020, marking its lowest level since March.

Existing home sales climbed to its highest level in 14 years in September.

The leading indicator increased in line with market anticipations in September.

The Markit services PMI unexpectedly climbed in October.

US housing starts rose less than market forecast in September.

The MBA mortgage applications fell on a weekly basis in the week ended 16 October 2020.

US preliminary Markit manufacturing PMI advanced less-than-expected in October.

Asian Markets ended mostly firmer last week, amid rising hopes for fresh fiscal stimulus from the US government.

Australia’s Westpac leading index climbed on a monthly basis in September.

In Australia, the Commonwealth Bank services PMI unexpectedly rose in October.

Australia’s seasonally adjusted retail sales fell in September.

In Australia, the Commonwealth Bank manufacturing PMI unexpectedly dropped in October.

In Japan, the Jibun Bank manufacturing PMI unexpectedly rose in October.

Japan’s national consumer price index (CPI) recorded a flat reading on an annual basis in September.

China’s house price index advanced in September.

The Reserve Bank of Australia (RBA), in its October meeting minutes, revealed the possibility for further monetary easing, including cutting the cash rate towards zero and buying long-term government bonds. Moreover, the central bank indicated that they “will maintain highly accommodative settings as long as is required.”

The People Bank of China (PBoC), in its latest monetary policy decision, kept its benchmark lending rate unchanged for the sixth straight month at 3.85%, as widely expected.


Currency Update

The EUR ended firmer against the USD last week, after Germany’s manufacturing PMI climbed to a 30-month high level in October.
The British Pound ended stronger against the greenback last week, amid optimism that the British and European negotiators would finalise a Brexit trade deal.
The US Dollar ended mostly weaker against its major counterparts last week, as the White House and Democrats moved closer to an agreement on a new coronavirus-related aid package after US President Donald Trump said he was willing to accept a large aid bill.


Beige Book: US economic activity grew at a “slight to modest” pace

The US Federal Reserve (Fed), in its latest Beige Book report, revealed that the US economic activity grew at a “slight to modest” pace in most parts of the country. Moreover, manufacturing, residential housing and banking industries reporting steady growth while commercial real estate and overall consumer spending remained weak. Also, employment levels were growing across the country but at a slow pace. On the inflation front, the Beige Book indicated that prices rose modestly across districts since the previous report.


The Week Ahead

Going ahead this week, investors will keep a tab on the US new home sales, the Chicago Fed National Activity Index, durable goods orders, the housing price index, the consumer confidence index, annualized gross domestic product (GDP), initial jobless claims, pending home sales, personal income and spending for further direction. Additionally, Eurozone’s services sentiment index, the consumer confidence index, the industrial confidence index, the business climate index, the economic sentiment indicator, European Central Bank (ECB) interest rate decision, the ECB monetary policy statement, GDP, the unemployment rate and the CPI along with Germany’s Ifo indices, the unemployment rate, the CPI, retail sales and GDP will keep investors on their toes. Also, UK’s consumer credit balance, mortgage approvals, the BRC shop price index and the Nationwide housing price index would garner significant amount of investor attention.


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