Macro Roundup (Sep 25)

SHANGHAI, Sep 25 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The US dollar traded at a two-month high and was set for a fifth day of gains on Thursday as investors sought safety on concerns over economic recovery as coronavirus cases surged in Europe and on US data showed rising unemployment claims.

Federal Reserve policymakers have called on the US government to provide more fiscal support, fuelling a bout of selling in risky assets overnight, while European economic data has worsened in recent days prompting investors to lighten their positions after a rally in August.

Initial claims for state unemployment benefits increased 4,000 to a seasonally adjusted 870,000 for the week ended Sept. 19, compared to 866,000 in the prior week and economist expectations for 840,000 applications.

Overnight on Wall Street, stocks eked out small gains. The Dow Jones Industrial Average closed 52.31 points higher, or 0.2%, at 26,815.44. The S&P 500 added 0.3% to finish its trading day at 3,246.59 while the Nasdaq Composite advanced 0.4% to close at 10,672.27. The moves stateside came in a wild session that saw the Dow down more than 200 points at its session low and up more than 300 points at one point.

Gold fell to its lowest in over two months on Thursday as the safe-haven dollar continued its advance on fears around the economic recovery, while fading hopes for more fiscal stimulus also weighed on the yellow metal.

“One of the factors that is pushing gold and stocks downwards is the broad assumption in the financial markets that the US Congress will not provide any further economic stimulus for at least the next several months,” said Jeffrey Christian, managing partner of CPM Group.

Oil prices steadied on Thursday, as the bullish impact of a fall in US inventories was offset by a stronger dollar and a renewed wave of coronavirus cases in Europe that led several countries to reimpose travel restrictions.

The jitters over demand and the economic outlook due to the coronavirus resurgence have spurred a rally in the dollar as investors turned to safer assets, adding pressure on oil prices. A stronger dollar makes oil less attractive to buyers using other currencies.

Prices were also capped by data showing a cooling of US business activity in September, the stalemate in the US Congress over more fiscal stimulus and US Federal Reserve officials flagging concerns about a stalling recovery.

In Europe, Britain, Germany and France imposed new restrictions to stem the spread of the novel coronavirus - all factors affecting fuel demand.

On the supply side, the market remains wary of a resumption of exports from Libya, although it is unclear how quickly it can ramp up volumes.

Coronavirus developments continue to weigh on sentiment as cases surge in Europe. The number of daily reported coronavirus cases in the UK has jumped by a quarter in the past day. The UK reported 6,178 cases, up by 1,252 since Tuesday, as the country grapples with a surge this month. Meanwhile, two German government ministers, Heiko Maas and Peter Altmaier, are now in quarantine after close contacts received positive coronavirus tests.

UK Finance Minister Rishi Sunak on Thursday announced a new emergency package of measures to contain unemployment, replacing the country’s furlough scheme which is due to expire next month.

Investors will monitor Chinese assets after FTSE Russell announced Thursday that Chinese government bonds are scheduled to be included in the FTSE World Government Bond Index starting October 2021.