Spreadex | Oct 21, 2020 09:09
Further lockdowns across Europe – Ireland is becoming the first EU nation to re-impose nationwide measures since the start of the pandemic – and fading hopes of a pre-election stimulus package in the US led to a rocky start on Wednesday.
The FTSE dropped 0.8%, sinking back to 5850 after straining to finish just above 5900 on Tuesday. Its morning was exacerbated by a sharp rise by sterling, which was up half a percent against the dollar and 0.3% against the euro following a 0.5% increase in UK inflation in September. The strength of that rise is perhaps surprisingly, given the lack of Brexit deal progress – or, rather, the active pursuit of a no deal exit – in the last few days.
Over in the Eurozone, as the continent continues to shutter towns and cities to combat coronavirus, the DAX dipped under 12700 to hit a near one-month low as it fell 0.6%, with the CAC also down 0.5%.
Echoing what happened yesterday, the Dow Jones is set to move in the opposite direction to its European peers, the futures suggesting a 60 to 70 point climb.
Nancy Pelosi and Steven Mnuchin appeared to have made progress on a stimulus agreement – the House Leader said she was ‘optimistic’ a deal could be struck in the next few days – but with Mitch McConnell reportedly privately telling Republican senators he has advised the White House to nix the package. This because it would put senators up for re-election in the tricky position of either going against the President, or backing a deal their fiscally conservative base would be opposed to.
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