Weekly Market Insight

Latest Economic & Market Update 29th September 2020

29th September 2020

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

Today’s focus:

  • Markets advance on Monday as investors see buying opportunity.
  • Market volatility expected as a result of US presidential election.
  • Lagarde warns deflation in the eurozone to persist.

Following a sell off last week, investors saw a buying opportunity in Europe as the Stoxx Europe 600 advanced 2.22% in trading on Monday. Financial stocks led the gains. The Euro Stoxx Banking Index rose 4.76%. There was a broad advance in the US on Monday as the major indices climbed. All sectors were in positive territory closing the day. The S&P500 climbed 1.61% and the Nasdaq rose 1.87%. WTI climbed 0.87% to $40.60 a barrel and Gold advanced by 1.06% to $1,881.48.

The spot level of the VIX currently stands at 26. VIX contracts that are set to mature in November are at a level of 33.15. The higher level of contracts that are maturing in November shows the expectation of market volatility ahead and the growing concern among investors regarding the risk that might arise from a disputed result of the US Presidential Election. The level of these contracts over the past few months had indicated that investors were expecting market volatility but this has recently been pushed even higher following President Trump indicating that he might not concede if he was to lose the election.

Addressing the European Parliament Committee on Economic and Monetary Affairs on Monday, Christine Lagarde warned that deflation is expected to remain in the eurozone for the coming months, influenced by a stronger euro and earlier declines in energy prices. The ECB has projected inflation to increase to an average of 1% in 2021, up from an average of 0.3% in 2020. Lagarde stated that consumer spending has “resumed significantly”, however, due to concerns about their jobs, consumers remain cautious. Despite the uncertainty and weakened demand on businesses investment plans, business investment has been picking up.

Source for data: Bloomberg

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

Global Market Update
(as at close of markets 28/09/2020)