NZX Extends Record-Setting Rally
New Zealand’s main stock index climbed for the eleventh straight session on Wednesday, with the NZX 50 index breaking above 14,470 points as enthusiastic investors continued their buying on expectations for a continued economic recovery. Gains came despite a delay in the development of a coronavirus vaccine and uncertainty around more financial aid in Washington.
Mexican Stocks Close Lower
Mexico’s IPC lost 210 points or 0.6% to 38,132 on Tuesday after the IMF revised downwardly its GDP growth forecasts for emerging and developing countries and the prospects of Johnson & Johnson’s Covid-19 vaccine turned dim. On the domestic side, the 2020 GDP estimate was revised to -9% from -10.5% in June. On the data front, industrial production rose 3.3% mom in August following a 7.1% jump in July.
Palm Oil Remains Near Multi-Month Highs
Malaysian palm oil futures traded around RM2,650 per tonne in mid-October, not far from an eight-month high of RM2,743 per tonne as heavy rain brought on by La Nina has started to disrupt production in Southeast Asian palm oil-producing countries.
Brazilian Equities Climb 1.1%
Brazil’s Ibovespa gained 1020 points or 1.1% to 98,503 on Tuesday, as brighter domestic growth prospects offset vaccine prospects. On the macro front, the latest central bank FOCUS survey showed that private sector specialists lowered their 2020 GDP forecast to 5.03% from 5.02%, the first downward revision in five weeks. Meanwhile, the IMF revised its own forecast for Brazil to -5.8% from -9.1% in June, although it slashed the 2021 estimate to 2.8% from 3.6%.
US Stocks Close Lower
Wall Street closed in the red on Tuesday and the Dow snapped a 4-day winning streak. On corporate news, shares of Apple dropped after the company unveiled its new iPhone 12 with 5G and disappointed expectations. On earnings, JPMorgan Chase beat expectations. On the policy front, Nancy Pelosi said she had no intention in meeting Senate Republicans in the middle absent sufficient offers on health-care issues. On the macro side, the IMF warned of a “sharp adjustment” in financial markets despite revising its global growth forecast to -4.4% in 2020 from -4.9% in June, as GDP in advanced economies is now projected to drop 5.8% this year compared to -8.1% in June. Meanwhile, growth for emerging markets was revised to -3.3% from -3.1% for 2020, mainly explained by India’s sharp contraction. The Dow Jones lost 158 points or 0.6% to 28,680. The S&P 500 declined 22 points or 0.6% to 3512. The Nasdaq dropped 12 points or 0.1% to 11,864.
TSX Eases from 1-Month Peak
Canada's main stock index began a holiday-shortened week in the red, with the S&P/TSX composite index falling from its highest close in more than a month on concerns over a delay in the development of a coronavirus vaccine and uncertainty around more financial aid in the US. Johnson & Johnson paused trials of its experimental COVID-19 vaccine after an unexplained illness in one of the volunteers. The materials sector led losses on the index amid weaker gold and copper prices.
Brazil Business Morale at 8-Month High
The Industrial Entrepreneur Confidence Index in Brazil increased to 61.8 in October of 2020 from 61.6 in the previous month. It was the highest reading since February, boosted by an improvement in the gauge measuring the current economic situation (51.9 from 49.5 in September) and the company's current situation (58.5 from 57.3). However, expectations over the next six months regarding the country's economic situation (60.6 from 61.2) and the company's situation (66.4 from 67.1) deteriorated.
Dow, S&P 500 Set to Snap 4-Day Rally
The Dow Jones and the S&P 500 were set on Tuesday to snap a four-day winning streak as news of the continuing gap between Republicans and Democrats over fresh fiscal stimulus rattled sentiment. At the same time, third-quarter earnings season has begun on Tuesday morning with JPMorgan Chase, Johnson & Johnson, Citigroup, and BlackRock all reporting better-than-expected results. Meanwhile, tech-heavy Nasdaq Composite seesawed between small losses and gains as investors rotated out of economically sensitive cyclical stocks into big tech names.
Steel Futures Trade Around 3600 Yuan/MT
Steel prices have been hovering around 3,620 Yuan/MT in October, marginally above September’s three-month low of 3,607 Yuan/MT, pressured by weak demand from European mills amid a global drop in car sales. Still, prices are expected to recover later this year amid continued robust demand from the construction and manufacturing industry in China.
Commodities: Silver -4.43%, Palladium -4.10%
Top commodity losers are Silver (-4.43%), Palladium (-4.10%) and Coal (-3.43%). Gains are led by Bitumen (3.52%), Crude Oil (2.00%) and Brent (1.70%).
Silver Falls from 3-Week Peak
Silver prices hovered around $24 an ounce on Wednesday, below 3-week highs reached on Monday, amid a stronger dollar and as investors wait for any developments around a fresh US fiscal stimulus. Meanwhile, the IMF said that the global economic fallout caused by the coronavirus is set to be less severe than initially feared. The US economy is expected to shrink 4.3% in 2020, much less than an initial estimate of an 8% back in June.
Gold Falls from 3-Week High
Gold prices hovered around $1,890 an ounce on Wednesday, down from 3-week highs reached on Monday, amid a stronger dollar and as investors await developments around a new US fiscal stimulus. Meanwhile, the IMF said that the global economic fallout caused by the coronavirus is set to be less severe than initially feared. The US economy is expected to shrink 4.3% in 2020, much less than an initial estimate of an 8% back in June. Still, gold's long-term outlook remains bullish amid expectations of a prolonged period of ultra-low interest rates coupled with the uncertainty over the economic recovery due to a recent spike in Covid-19 cases across major economies.
Spanish Stocks End at Over 1-Week Low
The IBEX 35 lost more than 75 points, or 1.1% to end at 6,875, its lowest level on a closing basis since October 5th, pressured by banks amid mounting concerns over a surge in coronavirus infections and its impact on the country's recovery. New restrictions on working and public gatherings were announced in Catalonia and Navarra, while Andalusian premier Juan Manuel Moreno said that his government will approve “more restrictive measures” in Granada due to a spike in cases. Meanwhile, the IMF said that Spain is likely to experience a 12.8% contraction in 2020, the worst performance in the euro zone amid the global pandemic. Also, news that Johnson & Johnson pause late-stage COVID-19 vaccine trials after unexpected illness weighed on sentiment.
European Equities Drop Amid Coronavirus Worries
European stock markets fell from five-week highs on Tuesday, with Frankfurt's DAX 30 retreating 0.9% to 13,019 and other major indexes sliding between 0.5% and 1.1%, amid concerns about the worsening coronavirus situation across Europe. France is expected to announce additional local lockdowns in the coming days, while Britain's government imposed on Monday a tiered system of further restrictions on parts of England, including closing several business activities in Liverpool. At the same time, weaker-than-expected data showed German investor morale deteriorated sharply in October amid concerns about rising COVID-19 cases, Brexit uncertainty and the US election. Investors also awaited the US third-quarter earnings season starting this week and digest upbeat Chinese trade data.
Italian Stocks Snap 8-Day Winning Streak
The FTSE MIB fell 160 points, or 0.8% to 19,559 on Tuesday, ending an eight-session winning streak and following a 0.6% gain in the previous session, amid worries over a spike in coronavirus cases and news that Johnson & Johnson pause late-stage COVID-19 vaccine trials after an unexpected illness. Italian Prime Minister Giuseppe Conte announced new restrictions on gatherings, restaurants, sports and school activities in an attempt to slow the spread of the recent surge in infections. The government decree bans parties in restaurants, clubs or in the open air, strongly recommends that people do not hold parties in their homes or host more than six guests at any time and advises that face masks, which are already obligatory in public buildings and outdoors, should also be worn at home when non-family members are present.
French Bourse Down from Over 3-Week High
The CAC 40 declined 39 points, or 0.8% to 4,941 on Tuesday, down from an over 3-week high reached in the previous session and following four sessions of gains, amid mounting concerns over surging coronavirus infections and news that Johnson & Johnson pause late-stage vaccine trials after unexpected illness. France’s Junior Housing Minister Wargon said that the French cabinet will meet later in the day to discuss further measures to fight the pandemic. At the same time, Government Minister Marlene Schiappa said that the government could not rule out imposing a curfew on cities such as Paris to curb the spread of COVID-19. The number of people being treated in French intensive care units for coronavirus exceeded 1,500 on Monday for the first time since May 27th.
London Stocks End Lower on Tuesday
The FTSE 100 lost more than 30 points or 0.5% to close at 5,970 on Tuesday, as concerns about the economic impact of new coronavirus restrictions mounted, while investors await new developments on Brexit ahead of Thursday's EU summit. Britain's government imposed on Monday a tiered system of further restrictions on parts of England, including closing several business activities in Liverpool. At the same time, a weak jobs report released earlier in the session hit sentiment. Data showed the UK unemployment rate rose more than expected to a three-year high in the June-August period, before the end of the government's job protection scheme. On the corporate front, clothing retailer French Connection Group tumbled 20% after posting a plunge in sales in the first half of the year.
Argentine Peso Hits All-time Low
USDARS increased to an all-time high of 77.37
Brazilian Stocks Lack Direction
The Ibovespa swung between gains and losses on Tuesday, as investors returned from a long holiday weekend. Investors weigh upbeat corporate earnings and news that Johnson & Johnson pause late-stage COVID-19 vaccine trials after unexpected illness in a study participant. At the same time, the IMF released its latest World Economic Outlook and projected that Brazil’s economy will shrink by 5.8% this year, an improvement of 0.8 percentage points from a previous estimate.
Dollar Moves Away from 3-Week Low
The dollar index strengthened to near 93.5 on Tuesday, moving away from 3-week lows in the previous session, as the earnings season in the US kicked-off and investors await any progress on a new stimulus bill. The Trump administration called on Congress to pass a simpler bill using leftover funds from an expired small-business loan program, after the near $1.9 trillion proposal hit resistance from both Democrats and Republicans over the weekend. Also, Joe Biden is seen beating President Trump in the November 3rd presidential election, raising hopes of a large stimulus plan. Meanwhile, the IMF sees the US economy shrinking 4.3% in 2020, much less than an initial estimate of an 8% back in June.
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