Stocks Mixed As Market Waits For Fed Speeches and Congressional Report

stock market morning report

Investors are focused on the speeches of the US Federal Reserve Chairman Jerome Powell and Treasury Secretary Steven Mnuchin before the US House Committee on Financial Services. The content of Powell’s speech is already known: on behalf of the regulator, he will promise to continue to help the economy, which has significantly strengthened but still requires additional support. In particular, in Q2, economic activity was growing from the depression level, and many indicators are improving. However, employment remains well below pre-crisis levels, which creates uncertainty in the market. Under these conditions, the Fed will continue to use the entire range of available support instruments as long as it is needed. Regarding Mnuchin, congressmen are likely to be interested in his opinion on the financial stimulus program, on the size of which Republicans and Democrats have not been able to agree on.The US currency today is moderately strengthening against the pound and the euro but is weakening against the Japanese yen.

Oil

Today, oil quotes made an attempt to climb back. Prices are supported by the weakening of tropical storm Beta, which did not lead to the shutdown of most refineries. However, significant growth is hindered by the complication of the situation with the coronavirus in the EU and the aggravation of relations between the PRC and the United States, which may lead to additional pressure on the global economy. In the evening, investors are waiting for the weekly API report on the US crude oil reserves. The last time they declined by 9.517 million barrels. The continuation of this trend may support prices.

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Eurozone

Investors are focused on the second wave of the coronavirus epidemic, which is causing tightening of quarantine measures and threatening to damage the economic recovery. The Spanish authorities were forced to quarantine some parts of Madrid since the capital region remains the most dangerous in the country. A number of cities in France (Lyon, Marseille, Bordeaux, etc.) have introduced restrictions on public meetings, the sale of alcohol, and visits to nursing homes. The German authorities are urging the population to strictly observe distancing measures and avoid crowds. The Italian authorities intend to oblige citizens arriving from disadvantaged regions to undergo a coronavirus test. Nevertheless, all these measures seem insufficient to contain the new spread of the disease, so experts expect them to be tightened. The euro is weakening today against the dollar and the yen but has an ambiguous dynamics with the pound.

United Kingdom

Investors are also focusing on the situation with the coronavirus in the country. Yesterday, the government imposed restrictions on the work of bars and restaurants, which should close at 22:00. Citizens were forbidden to gather in groups of more than 6 people. Today, GBP is weakening against USD and JPY and shows an ambiguous dynamics with EUR.Prime Minister Boris Johnson said today that Britain is at a “perilous turning point” and urged citizens to work from home whenever possible. He also announced the mandatory wearing of masks by retail staff and set the new restrictions for six months period.

Japan

Today is in Japan, the Autumnal Equinox Day is celebrated, so the stock exchange is closed and investor activity has decreased. It is only worth noting that investors are buying the yen as a traditional “safe haven” asset amid a likely tightening of social distancing measures in Europe. On Wednesday, the release of preliminary data on the Manufacturing and Services PMIs in Japan for September is expected. This year, both indices are in the stagnation zone and will probably not leave it this time either. The yen is moderately strengthening today against its main competitors – USD, GBP, and EUR.

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Australia

Investors are focused on the comments of the Deputy Head of the Reserve Bank of Australia, Guy Debelle. He stated that in order to achieve inflation and employment targets, the regulator is evaluating various options for monetary policy, including interventions in the foreign exchange market and negative rates. At the moment, according to the official, the growth prospects for these indicators are weak and do not correspond to the plans of the RBA. One option for the new course of action is to buy bonds with maturities over three years. The option of introducing negative rates is possible but unlikely. The Australian dollar today has an ambiguous dynamics against its main competitors – the euro, the US dollar, the pound, and the yen.

 

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