Thursday , October 22 2020

Stocks, futures surge before earnings; pound pares drop


European stocks rise with US futures as investors prepared for some of the biggest banks to report earnings including Wells Fargo & Co. and Bank of America Corp.
The pound pared declines after the UK signalled it will continue efforts to reach an agreement with the European Union on their future relationship beyond Prime Minister Boris Johnson’s October 15 deadline.
Asian stocks dipped, with China Evergrande Group slumping after the embattled developer raised less than anticipated in a share sale. Treasuries and the dollar were steady.
Investors are looking to earnings season to provide a spark for equity markets amid the dwindling prospects for more economic stimulus before next month’s election. House Speaker Nancy Pelosi demanded the Trump administration revamp its latest offer while Senate Republican leader Mitch McConnell pushed a smaller-scale strategy that she quickly rejected.
“We continue to see the ping-pong back and forth between the White House, Senate Republicans and Democrat controlled House, and what’s at stake is both the size of the stimulus but also what the money goes towards,” David Chao, a strategist at Invesco Ltd., said on Bloomberg TV. “I still think there will be a stimulus package between now and the end of the year, which is what the market is partially discounting.”
On the coronavirus front, countries across Europe widened curbs to try to regain a grip on the pandemic. Infections rise at the fastest pace since April in Germany, the Dutch prime minister ordered a partial lockdown and France reported a surge in patients needing intensive care.
Crude oil slipped close to $40 a barrel in New York trading as Saudi Crown Prince Mohammed bin Salman and Russian President Vladimir Putin urged other Opec+ oil producers to stick with agreed production cuts.
In emerging markets, Zambia has told creditors including Eurobond holders that the government won’t be able to meet its obligations if they don’t agree to its proposed interest payment holiday. The bonds fell to four-month lows.
The Stoxx Europe 600 Index climbed 0.2% as of 10:09 am London time and futures on the S&P 500 Index gained 0.4%.
While Nasdaq 100 Index futures increased 0.3%, the MSCI Asia Pacific Index falls 0.1%.
The Bloomberg Dollar Spot Index was little changed and the British pound decreased 0.1% to $1.2929.
While the Japanese yen strengthened 0.1% to 105.38 per dollar, South Africa’s rand weakened 0.3% to 16.5152 per dollar.
The yield on 10-year Treasuries fell less than one basis point to 0.72% and Germany’s 10-year yield dipped two basis points to -0.57%.
While Britain’s 10-year yield declined two basis points to 0.22%, Italy’s 10-year yield decreased one basis point to 0.647%.
West Texas Intermediate crude advanced 0.3% to $40.31 a barrel and gold strengthened 0.4% to $1,898.63 an ounce.
While natural gas declined 5.9% to $2.69 per mmbtu, Iron ore dipped 1.7% to $114.88 per metric ton.

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