September 29, 2020

Dow Futures Pause Their Gains

Dow Futures Pause Their Gains

European markets and U.S. futures are trading lower  today as investors pay close attention to the most important event of the day, the presidential debate. 

Election Debate 

The U.S. elections are just around the corner, and today, we are going to see the first presidential debate between Donald Trump and Joe Biden. Donald Trump is likely to say how he has improved the U.S. economy since the Trump era. He is expected to praise himself with regards to controlling the country’s coronavirus situation, even though the U.S. has the greatest number of coronavirus cases. 

On the other hand, Joe Biden will remind Americans why they need a change as he tries to impart the message of Trump cheating the U.S. tax system. He may also talk about how the U.S. has lost its position at the head of the global platform. The reality is that the U.S. no longer has the same relations with its allies then it had before. 

The debate isn’t going to impact the markets directly; however, investors are likely to use this event to gauge who is going to win the election. Having said that, the debate will bring higher volatility for currencies like the Chinese Yuan and the Mexican Peso. President Trump is going to remind Americans that he has been the toughest President against China in U.S. history. 

Economic Events 

There is nothing more important in terms of economic events than the U.S. unemployment data due on Friday. The U.S economic data doesn’t hold the same strength that it had a few months ago, and the more frequent data, the day-to-day data, also confirms this. The forecast is for the U.S unemployment rate to fall further; however, the best-case scenario could be just a minor improvement in the unemployment rate. 

Today, we have several speeches from other Fed members along with the U.S. Consumer Confidence data that is due later in the day. The forecast is for 90, while the previous reading was 84.8

Second Stimulus 

The significant catalyst that is likely to move the U.S. stock markets higher is still the second stimulus aid package. House Democrats have crafted a new bill of $2.4 trillion. Yesterday, the House speaker, Nancy Pelosi, spoke with Steven Mnuchin, the U.S. Treasury Secretary, and they are also expected to hold more talks today. 

Market confidence may see an immense boost if we do get another stimulus package, as the message will be clear that this government is serious in providing the support, and it will continue to do whatever it takes to support the stock market and the U.S. economy. After all, improvement in investor confidence is the most important element for stock investors. 

Coronavirus Update 

In terms of the coronavirus situation, the virus has claimed over one million deaths globally, and countries around the world are trying to keep the situation under control as cases have started to inflate. The desire is to circuit break the recent surge in coronavirus cases at all costs. Hence, restrictive measures have been reintroduced around the globe. 

Conservative Rebels 

As for the UK and Brexit, rebels in the Conservative party have indicated that they are on board with the Prime Minister, and a compromise has been achieved. The Brexit negotiations’ final round continues today, and this is likely to bring higher volatility for the Sterling. 

The currency has been all over the place due to the loose comments from the BOE. The bank has made its position clear, that if there is a no-deal Brexit, then a negative interest rate is pretty much a done deal. However, if we do have a deal, then it is highly unlikely that we will see a negative interest rate.  

A Question of Gold 

In terms of commodities, the precious metal, gold is still trading below the critical level of 1,900. Investors are hoping that the metal breaks the 1,900 mark again; as this assures them that the gold price will continue to move higher. So far, the strength in the dollar index is very much weighing on the price of gold.