US President Donald Trump announced early Friday morning that he and First Lady Melania tested positive for the corona virus. “We will immediately begin quarantine and we will get through this together,“ Trump wrote on Twitter. The President's physician, Navy Commander Dr. Sean Conley confirmed that he received confirmation of the positive tests on Thursday evening. The President and First Lady are both in good health, and they plan to stay at home in the White House during their convalescence, Conley said.
As always, the US labor market data are the focus of the capital markets. In view of the corona crisis and the ongoing election campaign, a recovery or a downturn on the labor market could have a decisive impact on the mood of consumers and voters. The data published on Wednesday by the private labor market service provider ADP pointed to stronger than expected job growth in the private sector, and the weekly data published yesterday on initial jobless claims also showed a positive trend. The number of claims fell by 36 000 to 837 000 in the week ending September 26. This means that 11.767 million Americans were receiving unemployment benefits as of September 19 a drop of 980 000 compared to the previous week.
On Wall Street on Thursday, the Nasdaq technology exchange recorded the strongest gains yesterday. The Nasdaq 100 selection index rose by +1.45% to 11 583.20 points while the Dow Jones Industrial, after a brilliant start to the new month with gains of almost two percent, ended the month with a meager +0.13% gain to 27 816.90 points. The market-wide S&P 500 rose by +0.53% to 3 380.80 points. The Tokyo Stock Exchange gained slightly at the end of the week after the severe technical breakdown on the previous day. Investors held back on their investments in the run-up to the eagerly awaited labor market data.
The ISM purchasing managers' survey in the American industrial sector, which received a great deal of attention due to its high correlation with overall economic growth, signaled that the recovery from the corona shock lost some of its momentum in September. The purchasing managers' index fell from 56.0 points in August to 55.4 points, but remains well above the growth threshold of 50 points.
In view of the continuing economic uncertainty and possible credit losses, the US Federal Reserve (Fed) wants to extend the moratorium for major banks, which limits the payment of dividends and share buybacks, until at least the end of the year. A total of 34 banks with total assets of more than USD 100bn each are affected. The Fed had ordered the requirement for the big banks at the end of June as part of its bank stress test. A further stress test is to be carried out before the end of the year and a decision will be made on how to proceed.
While negotiations for a trade agreement are still underway after the UK's withdrawal from the European Union, EU Commission President Ursula von der Leyen announced yesterday that Brussels will take legal action against London for violation of the EU withdrawal treaty. This concerns a law introduced by Prime Minister Boris Johnson which questions the regulation of the external border in Northern Ireland with Ireland and thus undermines important parts of the 2019 agreement (signed by the British). After the British House of Commons had approved the “Single Market Act“ and the ultimatum set by the EU until Wednesday had passed, the patience in Brussels seems to have run out. Von der Leyen said that the EU Commission considered the British initiative a breach of trust and a violation of international law.
Growth in the industrial sector in the euro zone also strengthened in September. This was signaled by the Purchasing Managers' Index (PMI) calculated by the London-based IHS Markit Institute, which rose from 51.7 points in the previous month to 53.7 points. Thus, despite the ongoing corona crisis, the activity barometer reached its highest level for more than two years. IHS Markit Chief Economist Chris Williamson commented: “The business outlook has improved within the space of a year, not only in Germany but also in France, Italy, Spain and Austria, suggesting that the upturn could take place on a broader basis again in the coming months.“
At the same time, it was reported that the unemployment rate in the euro area had deteriorated from 8.0% in the previous month to 8.1% against the background of the pandemic in August. According to Eurostat, the number of unemployed people in the euro zone rose by 251 000 compared to July of this year. 13.18 million people were thus registered as unemployed in the euro countries and 15.6 million in the EU as a whole.
|14:30||US||Unemployment Rate (September)||8.4%|
|14:30||US||Non-Farm Payrolls (September)||+1.371m|
|14:30||US||Private Payrolls (September)||+1.027m|
|14:30||US||Average Hourly Earnings (September, y/y)||+4.7%|
|16:00||US||Consumer Sentiment University of Michigan (September, final)||78.9|
|16:00||US||Factory Orders (August, m/m)||+6.4%|
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