There's speculation the US president will soon leave hospital, but there are other catalysts at play.
Markets have opened the week on a cautiously optimistic footing, with reports that the US President may be allowed to leave hospital today providing some relief from another bout of pandemic-related concerns.
There are also renewed hopes for a fresh round of fiscal stimulus in the US. Friday’s non-farm payroll figure was lower than expected, with 661,000 jobs being added in September versus a consensus of 900,000. While the unemployment rate was better than forecast (7.9% versus 8.2%), the fact remains that employment levels are significantly lower than those seen going into the pandemic earlier in the year. It is therefore hoped that the latest jobs figures may light a fire under the need for further stimulus.
Markets reacted negatively to the non-farm figures as well as Trump’s hospitalisation, although recovered some ground from session lows. In the year to date, the Dow Jones is now down 3%, the S&P 500 is up 3.6%, and the Nasdaq is ahead by 23.4%.
Over the coming weeks, the third-quarter reporting season will add some further colour to the state of companies on the ground on both sides of the pond, with particular attention falling on outlook comments for the remainder of the year.
The FTSE 100 index is also seeing the benefit of initially improved sentiment, although the index remains down by 21% in the year to date.
Further details on the Brexit negotiations between the UK and EU are likely to overshadow market data this week, as the ultimate deadline draws ever closer. Any further government proposals on additional stimulus to prop up an ailing UK economy would also likely provide some temporary relief.
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