Macro Roundup (Oct 27)

SHANGHAI, Oct 27 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The US dollar gained on Monday, rising for a second straight session, bolstered by safe haven bids amid surging coronavirus cases in Europe and the United States as well as a lack of progress on a US stimulus package.

The United States has recorded its highest number of new COVID-19 cases for two consecutive days and so has France. Spain announced a new state of emergency and Italy has ordered restaurants and bars to shut by 6 p.m.

On the stimulus front, US House Speaker Nancy Pelosi said on Sunday she expected a White House response on Monday to the latest relief plan, but there is little evidence a deal is close.

“Skittish investors are scooping up the greenback as virus cases accelerate around the world, stimulus talks in Washington remain in limbo, and trepidation is on the rise ahead of America’s presidential election,” said Joe Manimbo, senior market analyst, at Western Union Business Solutions in Washington.

Media reports that the Oxford/AstraZeneca vaccine has proved successful in elderly people and that staff at a major British hospital were told to prepare for it as early as next month were not enough to bolster sentiment.

On Wall Street, equities plunged in their worst session since September on Monday amid a surge in Covid-19 cases across the country. The Dow Jones Industrial Average fell nearly 650 points, for its worst day since Sept. 3 and closing below 28,000 for the first time since Oct. 6.

The S&P 500 lost 1.86% on Tuesday, dragged down by stocks that hinge on a reopening of the economy like airlines, cruise lines and retailers. The technology-heavy Nasdaq Composite fell 1.64%.

Stocks did close off their lows with the Dow falling more than 950 points at one point in the session.

A slew of large-cap companies report quarterly earnings on Tuesday with manufacturing giant’s 3M and Caterpillar set to release before the bell. Healthcare giants Eli Lilly, Merck & Co., and Pfizer also report before the opening bell. BP, Harley-Davidson, JetBlue and Raytheon Technologies also report Tuesday morning.

Wall Street is also gearing up for Microsoft earnings after the bell on Tuesday. The technology giant saw revenue grow 13% last quarter despite the pandemic. Advanced Micro Devices and Chubb also report following the close on Tuesday.

Oil prices fell more than 3% on Monday, extending last week’s losses as coronavirus cases continued to surge in the United States and Europe, while Libya’s rebound in crude production raised fears of oversupply.

Gold prices were steady on Monday as investors worried about a spike in COVID-19 cases and the race for next month’s US presidential election faced a stronger dollar.

Spot gold was up 0.1% at $1,904.60 per ounce. US gold futures settled mostly unchanged at $1,905.70.

“Gold has been trapped between $1,930 - $1,880. It is waiting to take cues from the election and there’s this resurgence of the pandemic,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago. “But the dollar index is up today, (and) has a strong inverse correlation to gold,” he added.

On the data front, the October business climate index Germany’s Ifo Institute slipped lower on Monday for the first time in six months, indicating that the recovery for Europe’s largest economy could be losing momentum.

In other news, British pharmaceutical giant AstraZeneca said its potential Covid-19 vaccine produced a similar immune response in older and younger adults. The news did little to offset concerns over rising cases, though AstraZeneca was one of the top gainers Monday with shares rising nearly 2%.

China’s industrial profits for September, the Conference Board’s Consumer Confidence Index for October and US durable goods orders for September are set for release today.