U.S. and European equity futures started the week on the back foot as a stimulus deal remained elusive and coronavirus infections hit a record for a second day. Asian stocks drifted and Treasuries advanced.

S&P 500 futures retreated, and Euro Stoxx 50 contracts pointed lower. Stocks slipped in Japan and South Korea, with shares in China underperforming. The dollar strengthened. U.S. House Speaker Nancy Pelosi said the chamber could pass a pandemic relief plan this week, though a deal with the White House remains elusive as chances faded of a resolution before next week’s election. Ten-year Treasury yields ticked lower, but remained above 0.8%.

Elsewhere, oil extended a decline. U.S. stocks rose Friday as investors held out hope for a spending package.

FX Overnight News:

  • The U.S. has seen its highest ever number of new COVID-19 cases in the past two days, while France also set unwanted case records and Spain announced a state of emergency.
  • Chinese blue chips (CSI300) shed 0.5% as the country's leaders met to chart the nation's economic course for 2021-2025, balancing growth with reforms amid an uncertain global outlook and deepening tensions with the United States.
  • A packed week for monetary policy sees three major central banks hold meetings. The Bank of Canada and Bank of Japan are expected to hold fire for now, while the market assumes the European Central Bank will sound cautious on inflation and growth even if they skip a further easing.
  • Data due out Thursday is forecast to show U.S. economic output rebounded by 31.9% in the third quarter, after the second's quarter's historic collapse, led by consumer spending.
  • The U.S. presidential election will again loom large as markets move to price in the chance of a Democratic president and Congress, which would likely lead to more government spending and borrowing down the road.
  • Oil prices fell further in anticipation of a surge in Libyan crude supply and demand concerns caused by surging coronavirus cases in the United States and Europe.

FX Overnight Volatility:

Today's Economic Calendar:

Chart of the Day:

Source: Bloomberg, Investing.com, Finviz

Posted on

October 26, 2020


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