Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
The markets are notably edgy this morning after Wall Street racked up its worst day in over a month.
The Dow fell 2.3%, or 650 points, yesterday – its biggest one-day decline since early September – amid growing concerns that the Covid-19 pandemic could drag the global economy down again.
Investors ditched stocks and scampered for the safety of government bonds after the United States reported a record daily total of cases on Friday (at 84,244), and then nearly surpassed it on Saturday.
With the US presidential election just a week away, no agreement on a stimulus page, and Covid-19 cases rising alarmingly fast in Europe, investors have a lot to worry out.
The tighter Covid-19 restrictions imposed across Europe is now hitting visits to cafés, restaurants, retail and other hospitality and leisure venues, raising concerns that the recovery runs out of steam.
Jeffrey Halley, senior market analyst at OANDA, explains:
The surge in Covid-19 cases around the world, notably Europe, has also sapped confidence, increasing fears of a “double-dip” scenario….
America’s recovery could also falter, Halley adds:
Exploding Covid-19 infections across the country could yet dent the American fourth-quarter comeback. Looked at in conjunction with Europe’s situation, there are severe threats to the consumption side of the global recovery.
For all the talk about China, it is essential to remember when America gets Covid-19, the rest of the world gets sent to the isolation facility.
After chunky falls yesterday, European markets are expected to open a little higher.
But today’s docket of economic data could change things – with Spanish unemployment figures this morning, and US durable goods, house-price data and consumer confidence later.
It won’t take much to unnerve the markets, as Stephen Innes, chief global markets strategist at Axi, explains:
It’s risk-off because Covid cases are rising and with curfews across Europe meaning economic dangers now lurk in the dark.
So, with the governments worldwide under pressure to tighten social mobility restrictions after a pick-up in new daily covid-19 cases, an effective vaccine candidate and even a partial stimulus bill and then topped up post-election cannot come quickly enough.
- 8am GMT: Spanish unemployment for Q3 2020: expected to rise to 15.9%, from 15.3%
- 11am GMT: CBI distributive trades survey of UK retail sales
- 12.30pm GMT: US durable goods orders for September: expected to rise by 0.5%, from 0.4%
- 1pm GMT: S&P/Case-Shiller index of US house prices for August
- 2pm GMT: US consumer confidence figures for Ocober: expected to rise to 102, from 101.8