Weekly Market Insight

Latest Economic & Market Update 29th October 2020

29th October 2020

Good afternoon, it is October 29th 2020 and here is your economic and market update from BlackBee. 

Today’s focus:

  • Stocks fall sharply on rise in cases and new lockdown measures.
  • Further injection of liquidity from ECB expected in December.

Stocks fell sharply during trading on Wednesday following a surge of Covid-19 cases in Europe and the US, combined with news that Germany and France were both implementing tougher restrictions to combat the rise in cases. In Germany, the DAX slid 4.17% and in France, the CAC 40 Index declined 3.37%. US indices followed suit and the S&P500 suffered its worst daily loss since June as it slid -3.53%. The S&P500 is now 3% lower than the level it was at prior to the crash in March. 97% of the S&P500 members declined during trading on Wednesday. Oil also fell on concerns that lockdown measures and the rise in cases would hamper demand. Crude oil fell 5.05% to $39.12 a barrel, excluding a dip at the start of October it is the first time Crude oil has been below $40 a barrel since May. The WTI fell 5.51% to $37.79 a barrel. (Data source: Bloomberg).

An ECB quarterly survey shows that banks are pulling back from lending to European businesses and households as they prepare for an increase in bad loans. The report showed that banks told the ECB they expect credit standards to tighten due to concerns regarding the recovery, especially as some sectors remain vulnerable. Due to the tightening credit standards, companies and households could see credit dry up. On Thursday the ECB met virtually to discuss monetary policy and decided to keep monetary policy unchanged and to not inject more stimulus. This comes despite the rise in cases, lockdown measures and the results of their quarterly survey that showed banks are tightening credit standards. The deposit rate remains at -0.5% and the bond buying plan also remains at €1.35 trillion. However, despite monetary policy remaining unchanged for the time being, the ECB stated risks were “clearly tilted to the downside” and they promised to thoroughly reassess the economic outlook and balance of risks and to respond in its December meeting, suggesting a further injection of money into the economy. (Source: Financial Times).

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

Global Market Update
(as at close of markets 28/10/2020)