Weekly market review September 14-18, 2020

September 14, 2020
Weekly market review September 14-18, 2020

Stock market

Stock market indices regained some of the lost positions amid growing interest in risky assets, caused by the news that AstraZeneca has resumed the final phase of the coronavirus vaccine trial, and Pfizer announced the possible completion of the trial by the end of October.

Japan’s next prime minister is likely to be Yoshihide Suga, an associate of incumbent Prime Minister Shinzo Abe. Suga was elected as the new head of the ruling Liberal Democratic Party on Monday. Suga promised to continue the economic policy of his predecessor, referred to as “Abenomics”. This policy provides for massive monetary and fiscal stimulus. Japanese stock market rose on the background of this news.

Currency market

The Euro rose on Thursday after the European Central Bank decided not to revise its long-term forecasts for GDP and inflation downward, and President of the ECB Christine Lagarde said that the Eurozone economy is seeing a “strong rebound” after collapse in the second quarter. Lagarde also noted that the recovery is in line with the bank’s expectations. She added that no possible increase in bond purchases, which totals $ 1.35 trillion, has been discussed.

The ECB left unchanged its forecast for inflation in 2022 at 1.3%, which suggests that the regulator does not see the need to further ease its monetary policy. Some analysts speculated that the bank could revise its long-term forecasts downward, paving the way for a possible expansion of stimulus.

The pound fell by more than 500 points last week due to the growing risks for Brexit without a trade agreement. EU threatened to pursue legal action against the UK if it does not refuse to pass legislation that conflicts with the Withdrawal Agreement. The EU demanded the UK to abandon the internal market law by the end of the month. UK government minister Michael Gove said the government will not revoke the bill.

The prospect of the UK leaving the EU without a deal is growing every day. EU chief negotiator Michel Barnier said the EU would step up plans for a no-deal Brexit.

Main events of the current week

The following macroeconomic indicators will be presented on Tuesday: industrial production in China, claimant count change and average earnings in the UK, German economic sentiment index. The minutes of the meeting of the Reserve Bank of Australia will be published as well.

On Wednesday, data on the consumer price index in the UK and Canada, retail sales in the US, GDP in New Zealand, and crude oil inventories will be published. Fed will hold a monetary policy meeting.

On Thursday, data on employment change in Australia, consumer price index in the Eurozone, jobless claims, and building permits in the United States will be presented. Bank of Japan and Bank of England will hold monetary policy meetings.

Data on retail sales in the UK and Canada will be released on Friday.

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Categories: Analysis

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