U.S. and European futures rebounded from the worst of Wednesday’s declines, though Asian shares retreated as rising coronavirus infections and tougher lockdowns added to worries about the economic hit from the pandemic.

Losses were more modest across Asia than in the American session, with shares in Australia faring worst and those in China rising. S&P 500 contracts climbed about 1% after the benchmark lost 3.5% Wednesday -- its biggest drop since June. European futures also gained. The dollar gave back some of its overnight advance and 10-year Treasury yields held around 0.78%. Oil was steady after tumbling more than 5% on concern rising infections will sap demand.

In China, nearly 1,000 firms are releasing third-quarter earnings on Thursday, with traders looking to see if the results confirm the nation’s accelerating recovery. The yen held a small decline after the Bank of Japan kept its key interest rate and asset purchases unchanged.

FX Overnight News:

  • The prime reason behind these losses was the announcement of additional measures to try and combat the new surge in Covid-19 cases, as France closed all non-essential businesses and Germany shut its hospitality industry for a month and banned most social gatherings. Italy and Spain have already imposed partial lockdowns.
  • With this in mind, investors will look to the European Central Bank for guidance after its governing council meeting later in the day.
  • “The ECB is moving closer towards more action, but it is too early to do so this month. While we look for a dovish bias and hints at more asset purchases (to come in December) this should not catch markets off guard,” said analysts at ING, in a research note.
  • That said, this decision has become more difficult as the continent-wide lockdowns will not only threaten another severe economic slump and will also put already stretched government budgets under more strain.
  • Oil prices edged higher Thursday, rebounding to a degree after the sharp falls from the previous session, helped by the shuttering of a large percentage of U.S. output in the Gulf of Mexico as Hurricane Zeta hit the coast of Louisiana.

FX Overnight Volatility

Today's Economic Calendar

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Source: Bloomberg, Investing.com and Finviz

Posted on

October 29, 2020


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