Spreadex | Oct 16, 2020 11:12
What will win out the week: covid-19 concerns, election forecasts or stimulus chatter?
The closer the election draws near – and we are now just over 2 weeks away from the vote – the less likely it is that a deal is going to be reached between House leader Nancy Pelosi and Treasury Secretary Steven Mnuchin.
The pair are still in negotiations, but one would assume that the appetite for co-operation may be lower on the side of the Democrats than the Republicans given the current polling.
According to some surveys, Joe Biden has accrued a 17 point leader over the incumbent Donald Trump, causing his fixed odds price to fall from 40/85 to 4/9 in the space of a week. Trump, meanwhile, has seen his price stay at 7/4.
As for the spreads, Biden is now at an Electoral College Votes price of 321-329, up on last week’s 320-328, with the President falling from 210-218 to 208-217.
Capping off a trio of positive movements for the challenger, Biden is at a Total States Won spread of 26.25-27.75 to Trump’s 23.25-24.75 – that compares to 25.5-27 and 24-25.5 around 7 days ago.
The thinking it is the stronger a Biden victory – especially if Democrats take the Senate, which is a tough proposition; polls have then as minor favourites, with a slim majority – the more robust the eventual stimulus package will be.
Yet the markets haven’t quite taken to all this just yet, distracted by the murky stimulus situation at present, and another wave of worry over covid-19 restrictions around the world, but most notably in Europe.
That’s likely to be an ever-present concern this week, and will be battling for investors’ attentions with the election, which sooner rather than latter will start to have a more pronounced impact on trading.
As for the economic calendar, it’s a quiet one – well, in the US at least, with building permits and housing starts on Tuesday, existing home sales and jobless claims on Thursday, and the flash manufacturing and services PMIs for October on Friday.
The country swung from a 6.8% contraction in Q1 to a 3.2% increase in Q2 – and another improvement is expected this time out, with forecasts of around +5.2%. Meeting that target is crucial if the markets want a positive start to the week.
The Q3 earnings seasons is now also in full swing, with some big boys coming out to play. IBM (NYSE:IBM) updates on Monday, followed by Netflix (NASDAQ:NFLX), Procter & Gamble (NYSE:PG), Philip Morris (NYSE:PM) and Lockheed Martin (NYSE:LMT) on Tuesday; Tesla (NASDAQ:TSLA) and Verizon (NYSE:VZ) on Wednesday; and Intel (NASDAQ:INTC), AT&T (NYSE:T), Coca-Cola (NYSE:KO) and, potentially, Amazon (NASDAQ:AMZN), on Thursday.
With Boris Johnson’s Brexit deadline shifted, the UK can get back to worrying about covid-19, especially after the announcement of the new tiered system led to tighter restrictions in various areas of the country, including London.
Beyond the pandemic, and the macro-matters dictated by the US, the FTSE and pound are facing inflation data on Wednesday, CBI industrial order expectations on Thursday, and flash PMIs and retail sales readings on Friday.
In terms of the corporate calendar, Bellway (LON:BWY) reports on Tuesday, with Antofagasta (LON:ANTO) and Segro (LON:SGRO) on Wednesday, and Unilever (LON:ULVR), Anglo American (LON:AAL) and Rentokil Initial (LON:RTO) on Thursday.
Like the UK, the Eurozone is in the grip of a fresh round of covid-19-related restrictions, including curfews in Paris and the shuttering of non-essential retailers etc in Ireland, and is an issue that will remain near the top of investors’ minds.
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Written By: Spreadex
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