October 2020 Market Wrap

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On the equities front, Dow Jones Industrial Average fell over 500 points last week with investors cutting back on their risk exposure as we step into this crucial week. A bipartisan stimulus package deal seems even more remote now as it is unlikely major policies will be made with the election closing in.

Throughout the past month, Europe has seen a strong resurgence of COVID-19 cases. While the major countries have tried to delay implementing lockdowns in view of economic considerations, the fast-rising numbers have forced both Germany and France to issue nationwide lockdowns. As a result, the European Central Bank issued a statement that not only were they planning for further easing, but have gone one step further by announcing that all options are on the table, in an attempt to manage further market sell off.

In the UK, the Oct 15th deadline set by Prime Minister Johnson passed without an agreement as he continues to take a hard stance. GBP traders appeared to be unfazed as shown by the Sterling’s strength, an indication that the markets do not believe that a no deal Brexit will actually happen.

While all eyes will be on the US elections this coming week, there will also be 3 central bank meetings as well as labour reports. Markets expect the Federal Reserve and the Bank of England to maintain status quo on interest rates, and there are increasing expectations for the dovish Reserve Bank of Australia to opt for further easing.

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