Stock market indices declined amid falling demand for risky assets caused by a deteriorating epidemiological situation in the US and Europe, posing risks of re-introduction of lockdowns. A number of European countries have already introduced restrictive measures. In particular, a state of emergency was declared in Spain, and in Italy the opening hours of bars and restaurants were limited. The United States set a new record on the number of new cases of COVID-19 infections. Lack of agreement on a new package of fiscal stimulus in the United States also contributes to the decrease in risk appetite. Despite Nancy Pelosi’s statement on progress in the negotiations, the parties still have disagreements, in particular, on the issue of providing financial aid to state and local budgets. A number of companies will release quarterly reports this week. In particular, the five largest US companies (by market capitalization) will report: Apple, Microsoft, Amazon, Google, Facebook.
The dollar regained some of its lost positions amid growing demand for safe-haven assets. The ECB meeting will take place this week, from which market participants will expect signals on a possible expansion of the quantitative easing program. The ECB is expected to extend monetary stimulus in December.
A meeting of the Bank of Japan will be held on Thursday, following which GDP and inflation rate outlook may be revised.
The pound strengthened last week amid the UK government’s announcement of its readiness to continue negotiations on a trade agreement with the EU. However, the parties still have significant disagreements, in particular, on the issue of fishery.
Oil price fell to a 3-week minimum on Monday amid risks of re-introduction of lockdown restrictions and rising deliveries from Libya. The National Oil Corporation of Libya has restored oil exports and announced its readiness to increase supplies to 1 million barrels per day.
Main events of the current week
- US durable goods orders and consumer confidence index will be released on Tuesday. Microsoft will release its quarterly report after market close.
- On Wednesday, data on the consumer price index in Australia and crude oil inventories will be released. The Bank of Canada will hold a monetary policy meeting. Boeing will report earnings before market open, and eBay will report after market close.
- On Thursday, data on German unemployment change, US jobless claims, pending home sales and GDP will be presented. There will also be meetings of the ECB and the Bank of Japan. Apple, Google, Facebook and Amazon will report earnings after market close.
- On Friday, data on German GDP, Eurozone consumer price index, Canadian GDP and Tankan large manufacturers index will be released.
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