{"id":293412,"date":"2020-10-16T02:56:51","date_gmt":"2020-10-15T15:56:51","guid":{"rendered":"https:\/\/www.gomarketingteam.com\/articles\/week-summary-us-stimulus-politics-brexit-and-covid-19\/"},"modified":"2021-02-19T12:13:18","modified_gmt":"2021-02-19T01:13:18","slug":"week-summary-us-stimulus-politics-brexit-and-covid-19","status":"publish","type":"post","link":"https:\/\/www.gomarkets.com\/en\/weekly-summaries\/week-summary-us-stimulus-politics-brexit-and-covid-19\/","title":{"rendered":"Week Summary – US Stimulus & Politics, Brexit and COVID-19"},"content":{"rendered":"

By Deepta Bolaky<\/strong>
\n\u00a0@DeeptaGOMarkets<\/a><\/p>\n

It was another wild week driven by geopolitics and COVID-19 updates. Risk sentiment remains fragile dragged by the chaotic US stimulus negotiations, Brexit woes and the resurgence of coronavirus cases in some parts of the world while vaccine trials suffered major setbacks. <\/span><\/p>\n

Stock Market – The Tweet<\/b><\/h4>\n

In a pandemic-induced environment where second waves of coronavirus are recorded in certain parts of the world, investors are mostly concerned on the amount of stimulus being put in the financial markets to support the global economy and the expectations of a vaccine to allow global activities to resume to normal levels.<\/span><\/p>\n

This week was a reminder that more stimulus in the US before the election is highly unlikely and that there might be further delays in the race of a potential COVID-19 vaccine. Global equities went on a roller coaster ride swinging from losses to gains amid a risk-on and risk-off environment.<\/span><\/p>\n

\"\"\"\"
\nSource: Bloomberg<\/p>\n

European stocks fell deeper as more restrictions across European regions loom. <\/span><\/p>\n

\"\"<\/p>\n

On the earnings front, the third-quarter earnings season kicked off with major US banks. In an ultra-low interest rates environment, the financial industry is struggling faced by a series of pressures triggered by the ongoing pandemic crisis. Over the months, banks had made significant provisions for credit losses and saw major declines in asset management revenues.\u00a0<\/span><\/p>\n

    \n
  1. JP Morgan<\/b> and <\/span>Citigroup<\/b> beat expectations and reported a surge in trading in financial markets. The banks have also slowed the pace of provisions for bad debts.\u00a0<\/span><\/li>\n
  2. Bank of America<\/b> and <\/span>Wells Fargo<\/b>\u2019s corporate results were disappointing as they saw a profit hit.<\/span><\/li>\n
  3. Goldman Sachs<\/b> posted a surge in quarterly profit. The firm\u2019s quarterly results reflected strong net revenues of $10.78 billion, record quarterly diluted EPS of $9.68 and annualized ROE of 17.5%, the highest quarterly ROE since 2010. Investment Banking generated quarterly net revenues of $1.97 billion, including the second-highest quarterly net revenues in Equity underwriting.<\/span><\/li>\n
  4. Morgan Stanley<\/b>\u2019s net revenues were up 16% and net income up 25%, reflecting strength across all business segments with a stronger-than-expected trading profit.\u00a0<\/span><\/li>\n<\/ol>\n

    Forex Market<\/b><\/p>\n

    In the forex market, the US dollar is regaining strength against major G10 currencies lifted by the risk-off sentiment. Amid a relatively subdued economic calendar, safe-haven currencies like the greenback and the Japanese Yen were better bid as major pairs were mostly left at the broader sentiment of the markets.\u00a0<\/span><\/p>\n

    \"\"
    \nSource: Bloomberg<\/p>\n

    Aussie Dollar \u2013 Rate Cut Calls and Employment data<\/b><\/h5>\n

    The Aussie dollar traded mostly on the backfoot this week dragged by elevated tensions with China, mixed employment data and the calls for a November rate cut.\u00a0<\/span><\/p>\n

    The jobs data were not as drastic as expected but may still be a driving factor for a rate cut next month. Employment fell by 30,000 people in September and the unemployment rate has risen slightly higher to 6.9% from 6.8% instead of the 7.1% predicted. Victoria has seen most of the job losses given the currency lockdown restrictions.\u00a0<\/span><\/p>\n

    All in all, the unemployment figures do not account for the people formally employed under the JobKeeper program but which are not actively working.\u00a0<\/span><\/p>\n

    However, on the bright side, Australian confidence seems to surge with the new Budget as consumers validate the government spending blitz.\u00a0<\/span><\/p>\n

    \"\"<\/p>\n

    As of writing, the AUDUSD pair is currently trading around the 0.70 level. <\/span><\/p>\n

    \"\"
    \nSource: GO MT4<\/p>\n

    British Pound – Brexit and Economic data<\/b><\/p>\n

    The British Pound remained underpinned by Brexit woes. The currency found some relied on the news that Brexit talks will extend beyond the self-imposed deadline by the UK Prime Minister on October 15. After rallying above the 1.30 level, the GBPUSD pair fell to the 1.28 level.\u00a0<\/span><\/p>\n

    On the economic front, employment reports were mixed:<\/span><\/p>\n