Europe To Start Higher As Trump's Health Improves
Fiona Cincotta October 5, 2020 7:44 AM
European bourses are opening on the front foot as President Trump’s condition improves. Speculation is growing that Trump could be discharged as early as today
European bourses opening on the front foot as President Trump’s condition improves. Speculation is growing that Trump could be discharged as early as today. We know that the markers hate uncertainty. The latest headlines are providing more clarity surrounding the health of the President and are easing the political uncertainty which has clouded over the markets since Trump was taken ill. Risk appetite is on the rise meaning that risker assets such as stocks are well supported in early trade on Monday, whilst safe havens such as the US Dollar and Gold are out of favour.
Doctors are saying that they are pleased with Trump’s progress proving some relief to the financial markets. Trump contracted covid with just one month to go until the US Presidential elections adding another layer of uncertainty to elections which saw the two candidates, Jo Biden & Trump, close in the polls. Furthermore, Trump had raised doubts over whether he would accept the result of the elections.
Today sees the release of global services PMIs. Whilst manufacturing has made an impressive recovery from the April’s contraction, service sectors, particularly in tourist destinations such as Spain and Italy are seeing the recovery wobble. Even France and German saw service sector activity back in contraction territory in the flash reading for September.
In the UK the service sector remains resilient for now. The dominant service sector saw activity expand quickly in August hitting 58.1 The more recent flash September reading printed at 55.1, slightly down from August’s peak but still a very strong number. Should Thursday’s print confirm 55.1 then Q3 will have seen an impressive expansion. However, there is a chance that the government’s most recently announced tightening of lockdown restrictions, including a curfew and new social distancing rules could knock confidence, hitting the PMI index.
Brexit talks to continue
Brexit optimism is underpinning the Pound and could provide support to the more domestically focused FTSE 250. Boris Johnson holding talks with EC President Ursula von der Leyen appears to have injected at least a bit more political momentum into talks, which will now continue this week, after little progress last week. As the clock continues to tick towards the government’s self imposed October 15th deadline ther is a growing sense of urgency between the two sides, which could be the key ingredient to a trade deal actually being done.
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.