Europe Starts Firmer Ahead of Potentially Volatile Week
Fiona Cincotta September 28, 2020 8:26 AM
European bourses are seeing an upbeat start to the week, boosted by a strong close on Wall Street on Friday, on hopes of further stimulus and encouraging data from China.
European bourses are seeing an upbeat start to the week, boosted by a strong close on Wall Street on Friday, on hopes of further stimulus and encouraging data from China. Risk on trading is boosting demand for equities, whilst the safe haven US Dollar slips away from its 2 month high.
Late on Friday the US Treasury Secretary Steve Mnuchin and House Speaker Nancy Pelosi agreed to start formal talks on a new coronavirus rescue package. There had been growing fears that with the US elections under 2 months away the two sides would struggle to reach a fiscal stimulus agreement; stimulus which is badly needed a the US economic recovery shows signs of stalling and the recovery in the labour market could even be reversing.
This week is set to be a BIG week for event risk with Brexit talks, the first Biden – Trump live debate for the Presidential elections along with a slew of data culminating in US non-farm payrolls. Volatility could be back with a bang this week.
The Pound is starting the week on the front foot amid mildly improving Brexit sentiment. The mood music surrounding trade talks has improved, which is offering its support to the Pound. In the absence of any high impacting UK data today, all eyes will be on Brexit headlines as Michael Gove meets with European Commission Vice President Maros Sefcovic. The Internal Markets Bill still casts a shadow over talks. However, the fact that the EU hasn’t broken away from negotiations yet is encouraging. Frost’s negotiating team also reportedly say that a deal will be agreed. The clock is ticking towards the British government’s self-imposed deadline of 15th October so Brexit headlines will take on even more importance than before.
Rising covid cases in Europe and the UK and the threat of tighter restrictions could keep any gains in Europe in check. With covid cases in the UK up 46% in a week and London on the brink of another lockdown, the next 6 months look set to be challenging for business across the board.
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