Weekly Market Insight

Latest Economic & Market Update 10th September 2020

10th September 2020

Good afternoon, it is September 10th 2020 and here is your economic and market update from BlackBee. 

Today’s focus:

  • US stocks rebound.
  • ECB set to meet today.
  • UK proposes bill to “disapply” Brexit deal.

Following three days of losses, US stocks bounced backed during trading on Wednesday. The Nasdaq climbed 2.71% having previously shed over 10% since the 2nd of September. The S&P was up 2.01% and the Dow Jones increased 1.6% for the day. The Stoxx Europe 600 climbed 1.62%. Following four days of heavy losses, oil prices rebounded with the WTI climbing 3.51% yesterday and Brent Crude climbing 2.54%. Gold climbed 0.8% to $1,946.84. The pound continued to decline against the euro on worries over Brexit negotiations. Source: Bloomberg

The euro has appreciated nearly 11% against the dollar since March raising concern for ECB policymakers. The stronger euro against the dollar will make exports from the eurozone more expensive and therefore less competitive. The strength of the euro will also make imports cheaper which will add deflationary pressure. The eurozone is in recovery mode, like every other economy, and a stronger euro will make recovery that bit more difficult. Last week the ECB chief economist stated that the ECB does not set policy to target exchange rates but the Euro-USD exchange rate does matter. The ECB is set to meet today and all eyes will be watching to see if they provide any insight on tackling the appreciating currency.

In the UK, Boris Johnson’s government has announced plans to take apart parts of the Brexit deal signed in January, in a move that has been criticised by Micheal Martin and the European Commission. The bill proposed would give the UK powers to “disapply” some of the rules agreed regarding the movement of goods through Northern Ireland. In the US, Speaker of the House of Representatives, Nancy Pelosi, has warned that a trade deal between the US and UK has “absolutely no chance” if Johnson’s government goes ahead with the bill. Although it breaks international law, Mr. Johnson’s cabinet ministers say there is justification in the move; They conclude it is necessary to clarify an agreement which they believe was rushed through in January. The move has also been condemned by a number of UK MPs.

Best & Worst Performers of Large Cap US Stocks on Wednesday
Click image to enlarge

Global Market Update
(as at close of markets 09/09/2020)