Gerald Fitzgerald’s Market Review October 27th
27 October 2020
LAST WEEK IN 30 SECONDS...
Market sentiment remained weak last week as concerns on corporate profitability were accentuated given a raft of new lockdowns in Europe following heightened Covid-19 cases. To compound this, early week optimism on a US stimulus being agreed dissipated with conservatives and democrats failing to reach accord. Global equities finished the week 1.2% lower in euro terms.
High quality Government bonds rebounded from the previous week’s lows whilst crude oil prices remain supressed with Brent Crude oil trading 2.7% lower on increased Covid-19 business interruption.
THIS WEEK IN 30 SECONDS...
Political factors continue to dominate headlines, in particular, with a week to go in the US presidential election. Above these political issues, the timelines for production of a Covid-19 vaccine remain in key focus with investor sentiment dipping following increasing contraction rates.
Elsewhere, over 6,000 companies provide earnings updates this week including mega caps Apple, Amazon and Microsoft. From an economic perspective, Tuesday sees US Durable Goods Orders with US GDP announcement on Thursday. From a Eurozone perspective, Friday sees GDP and inflation updates for the region.
EURO POISED FOR SHORT TERM VOLATILITY
The year-to-date (YTD) has been positive for the euro versus its developed peers. The currency is +7.3% YTD (to 26/10/2020) versus the US dollar and +5.7% versus GB pound. The upcoming weeks see significant political events including the US presidential election and UK trade negotiations, both of which could contribute to fluctuations in relative valuations.