Market Commentary – October 26, 2020

Kevin Jock

26th October 2020

    COVID-19 pandemic firmly back in headlines with the U.S. reaching consecutive record number of daily infections at 85,317. France followed suit with cases topping 50,000 as the government imposed upon two-thirds of population with a 9pm to 6am curfew. Italy and Spain fared no better, implementing sweeping measures in attempts to round their second-wave. WHO Director general Tedros Adhanom Ghebreyesus, warned “This is a dangerous moment for many countries” as they “strike a delicate balance” between protecting residents and minimizing economic shocks.

    Weekend news impacted Asia’s session with futures and indices opening lower. Australia initially rode against the wave, rallying as high as 38 points intraday before succumbing to the prevailing global pessimistic tone. Fortunately, Hong Kong remains closed today celebrating Chung Yeung Day.

    Fading U.S. stimulus hopes left Wall Street whipsawing during last Friday’s session with all three major benchmarks relatively unchanged. Progress in bi-partisan negotiations throughout the week had increased the probability of striking a deal before November elections. Come Sunday though saw both congressional parties accusing each other of moving the goalpost.

    Meanwhile, European indices bucked Wall Street’s trend ending higher. The FTSE and STOXX rose 1% and 0.8% respectively with France leading the pack higher by 1.1% on the back of reassuring news that Brexit trade talks between U.K. and E.U. will continue to October 28th.


Figure 1 (Source: IS Prime): Bitcoin Daily Chart : Spate of positive news see’s Bitcoin increase 23% from 10,644 to 13,106.

    Despite cloudy overcast, investor remain very risk positive on Friday as the U.S. dollar lost ground against developed counterparties. Sentiment is leaning towards a Joe Biden victory and a Senate floor flip, which would inevitably herald a substantial stimulus package and weaker dollar. Elsewhere, crude oil declined a little over 2%, below the $40 level while Bitcoin steadies above 13,000 following an endorsement from legendary investor Paul Tudor Jones.

    For the week ahead, central banks in Canada (on Wednesday), Japan (on Thursday) and Europe (on Thursday) will deliberate on monetary policy. No changes are expected from the aforementioned authorities as all are currently in wait-and-see mode.

Headliner to Review

  • Friday saw a plethora of services and manufacturing PMI across 3 continents.
    • In Europe, renew economic downturn saw two sectors diverge with manufacturing continue to hold up whilst services seemingly ravaged by intensifying COVID events.
      • Europe Flash Manufacturing: 53.7 to 54.4
      • Europe Flash Services: 48 to 46.2
      • Germany Flash Manufacturing: 56.4 to 58
      • Germany Flash Services: 50.6 to 48.9
      • France Flash Manufacturing: 47.5 to 46.5
      • France Flash Services: 51.2 to 51
    • In U.K., tightening restrictions on hospitality and lockdown has significantly affected consumer spending. In turn manufacturing and services PMI saw a downturn.
      • Flash Manufacturing: 54.1 to 53.3
      • Flash Services: 56.1 to 52.3
    • In U.S., a lack of COVID-19 containment measures has ensured business activity remain strong as many adapt to the pandemic.
      • Flash Manufacturing: 53.2 to 53.3
      • Flash Services: 54.6 to 56

Headliner to Watch

  • U.S. expected to see a rise in new home sales from 1011K to 1025K. Housing across the nation remains resilient as households take advantage of record low rates with expectations the Fed will keep to the floor till 2023.


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Antony Tan
Ben Li
Kevin Jock