Market Monitor – 02 October 2020

Market Monitor – 02 October 2020

Global stock markets have bounced back from recent lows thanks to some positive economic data as well as fresh hopes of new stimulus measures in Europe and the United States.This week’s gains were not unexpected given the heavy losses suffered by many markets in the latter half of September. But investors have had a number of reasons to be positive: at the start of the week, for example, news from China that performance in its heavy industries has been better than expected gave share prices around the world a considerable boost. And while markets have recently been pessimistic about the possibility of lawmakers in Washington agreeing a new stimulus package for the US economy before next month’s presidential election, there were encouraging signs this week that a breakthrough could be just around the corner.

The US

On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 3% down for the week so far, with the S&P 500 losing 2.2% in the same period. US investors are focused on two things at the moment – the pandemic and November’s presidential election. Unfortunately, sentiment relating to both has been largely negative in the past few days.Tuesday’s chaotic first presidential debate created a lot of hot air but seems to have done little to change either candidate’s chances of emerging victorious from the 3 November contest. Democrat Joe Biden remains favourite to win, polls suggest, and investors remain nervous about the extent of any anti-business policies he may choose to put forward.But the biggest source of positivity in the US has been the encouraging noises made by Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi, suggesting that bipartisan agreement on a new multi-billion stimulus package could be just days away.It should be noted that Wall Street had closed by the time President Trump’s coronavirus diagnosis was first reported on Thursday night – and it remains to be seen how investors will respond to the news Trump will be self-isolating with a potentially serious illness for at least the next week.

The UK and Europe

In the UK, the FTSE 100 ended Thursday just 0.6% ahead for the week: gains in London were more muted than elsewhere in Europe or in the US thanks largely to ongoing uncertainty over Brexit and the trade negotiations with the European Union.On Tuesday, MPs in Westminster approved a new Bill which gives the British government the power to reject parts of the EU Withdrawal Treaty it signed at the end of 2019 – a move that has now resulted in Brussels announcing legal action against the UK. Despite this, there are suggestions that both sides’ negotiation teams could be close to reaching agreement on a free-trade deal. Values in London remain under pressure from the rising level of Covid-19 infections across the UK and the possibility that strict new lockdown rules may have to be imposed nationwide in the weeks ahead. In Frankfurt, the DAX index ended Thursday’s session up 2.1% for the week: confidence in Germany was boosted by the positive industrial data from China as well as solid manufacturing figures from across the eurozone. In Paris, the CAC 40 gained 2%.
Change (%)
FTSE 100
FTSE All-share
S&P 500
Dow Jones

Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 01/10/2020.

2 October 2020
Mark King
Head of Investment Content
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Market Monitor – 02 October 2020

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Important information: Past performance is not a guide to future performance. Your capital is at risk. The value of investments and any income is not guaranteed and can go down as well as up and may be affected by exchange rate fluctuations. This means that an investor may not get back the amount invested. This document is not investment, legal, tax, or accounting advice. Investors should consult with their own professional advisors for advice on any investment, legal, tax, or accounting issues relating to an investment with Columbia Threadneedle Investments. The analysis included in this document has been produced by Columbia Threadneedle Investments for its own investment management activities, may have been acted upon prior to publication and is made available here incidentally. Any opinions expressed are made as at the date of publication but are subject to change without notice and should not be seen as investment advice. This document includes forward looking statements, including projections of future economic and financial conditions. None of Columbia Threadneedle Investments, its directors, officers or employees make any representation, warranty, guaranty, or other assurance that any of these forward-looking statements will prove to be accurate. Information obtained from external sources is believed to be reliable, but its accuracy or completeness cannot be guaranteed. Issued by Threadneedle Asset Management Limited. Registered in England and Wales, Registered No. 573204, Cannon Place, 78 Cannon Street, London EC4N 6AG, United Kingdom. Authorised and regulated in the UK by the Financial Conduct Authority. Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies.

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