Spreadex | Oct 19, 2020 09:12
A rebounding, if disappointing, Chinese Q3 GDP reading and a new stimulus deadline in the US were the focal points of Monday’s trading.
The Chinese economy grew by 4.9% in the third quarter, well up from Q2’s 3.2% increase, and Q1’s 6.8% contraction. And though that was notably below the 5.5% forecast, any ill-feeling was tempered by improving industrial production and unemployment rate numbers, and, crucially, a far better than expected retail sales reading. That metric – which, after the GDP figure, is the most important for investors – surged from 0.5% in August to 3.3% in September, marking the 2nd positive reading in a row.
In the US, Nancy Pelosi has set a 48 hour deadline for a bi-partisan stimulus deal to be agreed upon if a package is to be put in place before the election. Negotiations wouldn’t stop after that point, but would mean any relief would be delayed until after the vote.
Overall the European markets viewed the morning’s headlines in a positive light, taking a fairly gentle stroll into the green as the week got underway.
The FTSE could only muster a 0.3% increase after the bell, keeping it the wrong side of 5950. That’s because the pound shot 0.3% higher against the dollar and 0.4% against the euro, following Michael Gove’s claim that the door is still ‘ajar’ for a post-Brexit trade agreement between the UK and EU.
With stimulus talks ongoing, and Joe Biden well ahead in the polls, the Dow Jones is currently planning to join its European cousins for a picnic on the green. The futures have the US index rising 150 points, a move that would push it back to 28,750.
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