Moody’s Cuts United Kingdom Rating to ‘Aa3’
Moody’s Investors Service downgraded on Friday 16 October 2020 the United Kingdom’s sovereign credit rating to Aa3 from Aa2 and assigned a stable outlook, citing three triggers behind the cut: 1) the UK's economic strength has diminished since we downgraded the rating to Aa2 in September 2017, with growth meaningfully weaker than expected; 2) the UK's fiscal strength has eroded, as general government debt has risen further as a result of the pandemic, and 3) the weakening in the UK's institutions and governance that Moody's has observed in recent years, which underlies the previous two drivers. Standard & Poor's credit rating for the United Kingdom stands at AA with a stable outlook. Fitch's credit rating for the United Kingdom was last reported at AA- with a negative outlook. DBRS's credit rating for the United Kingdom is AAA with a negative outlook.
Euro Posts Weekly Loss Amid Lockdown Fears
The euro settled at $1.172 on Friday, booking a 0.4% weekly fall, amid concerns about Europe's economic recovery as several countries across the region were forced to impose new lockdown restrictions to curb the COVID-19 pandemic. At the same time, Brexit talks ended without any signs of a trade agreement, with British PM Johnson urging the UK to prepare for no deal and EU Commission president Ursula von der Leyen saying that negotiations would continue next week.
Silver Suffers 4% Weekly Fall
Silver settled at $24.1 an ounce on Friday, booking a 4% weekly loss, after two straight weeks of gains. The white-metal has been under pressure amid uncertainty surrounding a US relief package deal and as investors fear that the demand for industrial metals in Europe might take a hit as several countries across the region impose fresh lockdown measures.
Gold Posts 1st Weekly Decline in Three Weeks
Spot gold settled just below $1,900 an ounce on Friday, booking a 1.6% weekly loss, its first decline in three weeks. US lawmakers seemed unlikely to agree on a stimulus package before the November election even as coronavirus cases continued to rise and the labor market recovery showed signs of slowing. At the same time, stricter lockdown measures across Europe and a disappointing jobless claims report in the US pushed up the dollar, making gold more expensive. The metal has risen about 25% so far this year.
Mexican Stocks Close Lower
Mexico’s IPC lost 183 points or 0.5% to 37,876 on Friday, as fiscal uncertainty in the US outweighed better than expected domestic data. On Friday, the AMLO administration informed that more than 100 thousand formal jobs were created in the first half of October following net gains of 90 and 110 thousand in August and September, respectively. The IMF revised during the week its to -9% its Mexican GDP growth forecast for 2020 from -10.5% in June. During the week, the IPC lost 1.6%.
Brazilian Stocks Decline on Friday
Brazil’s Ibovespa lost 745 points or 0.8% to close at 98,309 on Friday, as investors remain concerned about the government's ability to fund a new fiscal program without surpassing its spending ceiling. Global sentiment was nudged by a stronger than expected retail sales report in the US and after Pfizer said it could apply for a U.S. emergency use of its COVID-19 vaccine in November. On the domestic corporate side, shares of steelmaker CSN rose after beating Q3 earnings estimates. During the week, the Ibovespa advanced 0.8%.
Dollar Enjoys Best Week in Three
The dollar index gained 0.7% over the week to settle at 93.7 against a basket of currencies on Friday, its first weekly rise in three. Concerns about rising COVID-19 cases, stricter lockdown restrictions in Europe, Brexit uncertainty, and an attempt from the PBoC to depreciate the yuan supported the greenback. At the same time, investors awaited news about a stimulus package in the US and digested a weaker-than-expected jobless claims reported released on Thursday.
WTI Crude Falls on Friday, Books Modest Weekly Gain
WTI crude futures fell 0.5% to settle at $40.7 per barrel on Friday, as investors remained worried about the fuel demand recovery amid a spike in coronavirus cases in the US and Europe and stricter lockdown restrictions across several European countries including Germany, France and the UK. Meanwhile, trader focus shifts to a OPEC's Joint Technical Committee meeting on Monday at which a panel of officials will be discussing the 2021 outlook. According to a confidential document seen by Reuters, major oil producers see a prolonged second wave of the pandemic and a jump in Libyan output pressuring the oil market. On a weekly basis, WTI gained 0.3% as a larger-than-expected draw in US crude oil inventories last week helped to boost sentiment.
TSX Drops on Poor Economic Data, Oil and Gold Weakness
Canada’s S&P/TSX Composite Index lost 60 points or 0.4% to 16,439 on Friday, as disappointing domestic data and a drop in both oil and gold prices overshadowed a strong retail sales report in the US and Pfizer’s nearing application for an emergency use for its Covid-19 vaccine candidate. On the data front, official figures showed manufacturing sales in Canada fell 2% over a month earlier in August, more than market expectations of a 1.4% decrease and marking the first decline in four months. WTI crude prices declined 0.5% to $40.7 a barrel and spot gold dropped below $1900 per ounce. During the week, the TSX lost 0.7%.
US Treasury International Capital Flows Turn Positive
Overseas investors bought USD 86.3 billion of US assets, including short-dated instruments, in August 2020 after selling an upwardly revised USD 89.5 billion in the previous month. Meanwhile, foreigners sold USD 33.1 billion of long-term US securities, including government and corporate after dumping USD 22.8 billion in July. Overseas investors bought USD 27.8 billion of Treasuries in August after purchasing an upwardly-revised USD 11.3 billion in the previous month.
US Stocks Close Mixed, Book Weekly Gain
Wall Street closed mixed on Friday with the Dow rising after three consecutive drops, as economic data surpassed expectations but fiscal uncertainty lingers. Retail sales jumped 1.9% in September and soundly beat consensus estimates of 0.7%, while consumer confidence for October also came in better than expected. On a more negative note, industrial output unexpectedly contracted in September. Elsewhere, Pfizer said it would apply for emergency use of its Covid-19 vaccine as soon as it reaches safety milestones. On the corporate side, Boeing shares outperformed after the European Union Aviation Safety Agency said the 737 Max jet was safe to fly again. The Dow Jones added 112 points or 0.4% to 28,606, while the S&P 500 finished near the flat line at 3,484. In contrast, the Nasdaq lost 42 points or 0.4% to 11,672. During the week, the Dow gained 0.1% and the S&P 0.2%, notching their third straight weekly gain. The Nasdaq added 0.8%, posting a four-week winning streak.
Brent Crude Falls on Friday, Little-Changed on the Week
Brent crude futures lost around 0.9% to settle at $42.8 a barrel on Friday, as concerns about fuel demand recovery mounted due to a resurgence in coronavirus infections in the US and Europe. Several countries including Germany, France and the UK were forced to impose stricter lockdown restrictions, in an attempt to curb the spread of the pandemic. Meanwhile, a panel of officials from OPEC+, called the Joint Technical Committee, will be meeting on Monday to discuss the 2021 outlook. A confidential document seen by Reuters showed that major oil producers are worried about the negative impact of a prolonged second wave of the pandemic and a jump in Libyan output on the oil market. For the week, Brent was nearly unchanged helped by data showing a larger-than-expected draw in US crude oil inventories.
US Posts Largest Budget Gap on Record in FY 2020
The US posted a budget deficit of USD 125 billion in September 2020, the fiscal year's final month, compared with an USD 83 billion surplus in the same period last year and market expectations of a USD 124 billion gap. Outlays jumped 71 percent to USD 498 million, amid efforts to support the economy hit by the coronavirus crisis; while receipts were almost unchanged at USD 373 billion, as higher Federal Reserve earnings and excise tax collections offset lower personal and corporate income tax revenues. Considering the 2020 fiscal year, the budget deficit hit an all-time high of USD 3.132 trillion, more than double the previous record of USD 1.416 trillion during fiscal 2009, as outlays jumped USD 2.105 trillion from the previous year to a total of USD 6.55 trillion, boosted by spending on healthcare and unemployment compensation, and the cost of small business and corporate rescue programs approved by Congress.
Commodities: Bitumen +21.85%, Baltic Dry -5.38%
Top commodity gainers are Bitumen (21.85%), Rubber (2.97%) and Sugar (1.90%). Biggest losers are Baltic Dry (-5.38%), Coffee (-2.37%) and Orange Juice (-2.09%).
US Stocks Rise on Vaccine Hopes, Retail Trade Data
Wall Street's main indexes held onto early gains on Friday, boosted by hopes that Pfizer could apply for a US emergency use of its coronavirus vaccine as soon as November. In addition, stronger-than-expected data on September's retail sales and October's consumer morale helped to support sentiment, while the latest industrial output report showed an unexpected contraction in activity last month. On the corporate front, quarterly results from VF and Bank Of New York Mellon came in better-than-expected, while earnings reports from Kansas City Southern, J.B. Hunt and Schlumberger disappointed. Investors await news about more federal aid to help businesses and households hit by the pandemic crisis. The Dow Jones added more than 250 points or 1%; the S&P 500 advanced around 30 points or 0.8%; and the Nasdaq gained over 50 points or 0.5% around 2 PM NY time.
Pound Suffers Weekly Loss Amid No-Deal Brexit Talk
Sterling ended the week 1% lower at $1.292, amid Brexit uncertainty, Britain's stricter lockdown measures and the possibility of negative interest rates. PM Boris Johnson urged UK businesses to prepare for no deal Brexit, as the EU continued to reject the idea of a free trade deal and as both sides remain divided on key issues such as fishing rights, corporate governance and fair competition. Meanwhile, EU Commission president Ursula von der Leyen announced that negotiations would continue next week, while Johnson's spokesman said that trade talks with the EU were over unless the bloc changed its negotiating position.
Russia Producer Prices Flat in September
Producer prices in Russia showed no growth from a year earlier in September of 2020, following twelve consecutive monthly declines and after a 0.8 percent drop in August. Deflation eased for mining & quarrying (-7.2 percent vs -8.9 percent in August) and prices advanced faster for manufacturing (1.5 percent vs 1.1 percent) and electricity, gas, steam & air conditioning (5.7 percent vs 4.7 percent). Meantime, inflation was steady for water supply (at 5 percent). On a monthly basis, producer prices went up 0.6 percent, after rising 1 percent in August.
Spain Stocks End Higher on Friday
The IBEX 35 added 33 points, or 0.5% to close at 6,850 on Friday, as optimism over a potential Covid-19 vaccine offset concerns over rising coronavirus cases and renewed restrictions in Europe. Spain reported 13,318 new Covid-19 cases on Thursday, the second-highest daily figure since the end of June. Meantime, Spanish authorities continue to expand restrictions on mobility, as more than thirty municipalities in five autonomous communities will be subject to perimeter confinement this weekend to fight a growing outbreak. On the economic front, the government expects a recession of 11.2%, the worst since the civil war, due to the impact of the coronavirus pandemic. On the corporate front, Spanish pharmaceutical PharmaMar gained more than 3%, after the company reported positive results of its drug trial against COVID-19. For the week, the IBEX 35 lost 1.5%.
Argentine Peso Hits All-time Low
USDARS increased to an all-time high of 77.54
Italian Stocks Post 1st Weekly Drop in Four
The FTSE MIB lost 1% to 19,390 during the last week, the first weekly drop in four and reversing from a 2.8% gain in the previous period. Traders worried over Europe’s recovery as several countries like Germany, the UK, France and Spain reimposed lockdown measures due to a resurgence in coronavirus cases. Italy reported a record 8,803 new coronavirus infections on Thursday, bringing the country’s total to 381,602 and up from Wednesday’s record of 7,332. Considering Friday only, the FTSE MIB gained 324 points, or 1.7%.
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