WATCH: European markets optimistic over stimulus hopes
Investor confidence grew overnight following renewed hopes for a US stimulus deal and markets now pricing in a Democratic victory in November.
On the Brexit front, the pound slid on Wednesday after reports emerged that the UK government was threatening to walk out of talks next week if a deal wasn’t clearly in focus by 15 October.
However, Deutsche Bank analysts said in a note on Thursday: “This simply echoed what UK prime minister Johnson had said back in early September,” explaining why sterling swiftly clawed back most of its losses. With European Council president Charles Michael tweeting that “the EU prefers a deal but not at any cost” Deutsche analysts added that they still hold out hope that progress can be made to extend talks.
European markets were in positive territory. The pan-European STOXX 600 (^STOXX) was up 0.9%. Germany’s DAX (^GDAXI) was up by 1%, and France’s CAC 40 (^FCHI) also tilted up by 0.8%. The FTSE 100 (^FTSE) was up by 0.6% in London.
In Europe, COVID-19 concerns continue to rage in pockets throughout the continent. Scotland announced restrictions on Thursday, and there may be more coming in northern England.
France and Spain have posted record increases in cases and further restrictions in Italy could come as travellers from the UK, Belgium, Netherlands, and Czech Republic may be subjected to testing before entering the country.
In the US, vice-presidential nominees Mike Pence and Kamala Harris clashed over the Trump administration’s handling of the COVID-19 outbreak in their debate on Wednesday. Climate change, China and the Supreme Court were also major points of contention.
Various polls are showing Democratic presidential nominee Joe Biden’s lead is widening in crucial battleground states. Before entering the debate, president Trump was down 9.5 points to former vice-president Biden in Fivethirtyeighty.com’s national polling averages. A Quinnipiac poll also showed the president was behind Biden by 13 and 11 points in Pennsylvania and Florida, respectively.
Traders are gaining confidence that a stimulus deal is likely on its way. Trump said on Wednesday that he will resume talks after the election and further positive news came from house speaker Nancy Pelosi, who signalled that she was open to some form of partial measures, particularly for the airline industry.
Asian markets were mixed.
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