Europe Mixed As Trump Leaves Hospital, German Factory Orders Jump
Fiona Cincotta October 6, 2020 7:40 AM
European bourses are seeing a mixed start on the open as the upbeat mood spills over from the US into Asia and fades into Europe
European bourses are seeing a mixed start on the open as the upbeat mood spills over from the US into Asia and fades into Europe. Markets are trading positively as investors track stimulus developments and President Trump’s health along with upbeat German Factory orders.
In addition to Trump’s health, the markets attention is also firmly on the prospects of additional US stimulus. US Speaker Nancy Pelosi and US Treasury Secretary Steve Mnuchin continue talks towards a deal. Any signs that more stimulus coming will boost risk appetite lifting riskier assets such as stocks whilst dragging on the US Dollar.
With the US elections a month away – which in market terms is a long time, the investors are almost more preoccupied with the prospects of additional stimulus right now, than who could be taking the keys to the White House. This is particularly the case given that previous support has expired.
Adding to the upbeat mood German factory orders jumped 4.5% MoM in August, up from 2.8% in July and smashing expectations of 2.6% gains. The strong data comes following impressive German retail sales in the previous week and falling unemployment, raising optimism surrounding the economic recovery in the Eurozone’s largest economy.
The economic calendar is relative quiet across the session. Brexit headlines and a speech by ECB President Christine Lagarde could drive the somewhat subdued FX markets.
Oil Extends Gains
After a 5% rally in the previous session, oil is extending those gains for a a second straight session, clawing back losses from the end of last week when Trump fell ill. Oil is being supported by Trump’s return to the White House, the prospects of additional stimulus to counter the impact of the pandemic and as another storm threatens the Gulf of Mexico. An expanding strike in Norway which has so far resulted in the temporary closure of 6 offshore oil and gas fields has also helped buoy prices. Demand sentiment is supported by the prospect of a deal whilst supply side factors are tightening keeping oil elevated.
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.