Daily Market Commentary 15th October 2020

Global equity markets turned negative overnight, after vaccine trials were suspended and the bailout/stimulus package in the US looks less likely. Eli Lilly joined John & Johnson and suspended trials, which shook markets as the virus continues to surge across Europe. Treasury Secretary Steve Mnuchin has dampened the prospects of a bail-out/stimulus deal in Washington, before the election, despite some progress. The Democrat House will not budge and the Senate look likely to go it on their own, with smaller targeted packages.

The IMF reviewed global contractions upwards, from (4.9%), to (4.4%). This apparently good news, may well be reviewed again, as the surging virus engulfs Europe once again. It appears the WHO has realised long held beliefs that ‘lock-downs are the wrong strategy, were correct. Listening to the medical experts was a big failure and caused a devastating health and economic impact. UK/EU trade talks may be extended beyond the October 15^th deadline, boosting the GBP to 1.3020, while the EUR trades 1.1750.

The trade exposed commodity currencies enjoyed some stability, despite headwinds. The RBNZ spoke about the lack of growth/inflation in an economy that was on ‘life support’. This failed to move the NZD, which pushed back to 0.6650, ahead of the National elections on this coming Saturday. The AUD traded back to 0.7150, ahead of key employment data released today, which is expected to be moving in the wrong direction.