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October progresses and further pandemic restrictions are being reestablished around the world. Markets remain broadly immune though. It seems that most direct effects of managing the virus are now priced in and it’s hard for them to have a meaningful impact on investors. 3Q20 reporting season started.
So far the results coming out form US companies have been surprisingly good. Major banks like Citi (C), Goldman Sachs (GS) and JPMorgan (JPM) have shown their balance sheets under control, lower provisioning and better EPS. It’s definitely having a pretty big calming effect. I wrote about this in short here. In this post you will also find a list of 3q20 reporting dates for our Global Leaders Portfolio (GLP) stocks.
-> The week started on a high note led by Tech. Apple (AAPL) gained as much as 6.4% on Monday. Investors hopes for its upcoming 5G iPhone are set pretty high. Other heavyweights like Alphabet (GOOG), Facebook (FB), Amazon (AMZN) and Microsoft (MSFT) were all up 2-4% as well.
-> The markets also seem to have gotten less fixated on the stimulus to come finally. Latest White House $1.8tn offer found no support and the ping-pong continues. Still this did not turn equities lower, as it did in former weeks.
-> On Tuesday C and JPM reported better-than-expected numbers (see above), accompanied by health care giant Johnson&Johnson (JNJ). JNJ not only beat Sales and EPS expectations, but also increased “guidance for Full Year Reported Sales by $1.0 billion and Adjusted EPS by $0.15 driven by the strength of the recovery and strong underlying business fundamentals”.
-> Indices were vulnerable both on Tuesday and Wednesday though. Treasury Secretary Steven Mnuchin confirmed that a deal on stimulus before elections might be tough. It seems this is the basic scenario now for Wall Street.
-> On Wednesday also GS, Wells Fargo (WFC) and Bank of America (BAC) all beat the expectations in their 3Q20 reports.
-> Similar mood and choppiness continues on thursday both in US and Europe, where new restrictions regaring Covid-19 were introduced.
-> Friday’s main story was the Retail Sales data for September. The number hit at +1.9% vs. 0.7% expected. Investors cheered it and indices traded in the green.
-> Effective weekly index changes: S&P500 +0.2%, Nasdaq +0.8%, EuroStoxx600 -0.8%, DAX -1.1%, Nikkei225 -0.9%.
Other markets events:
-> Bonds: the US yield curve (10y-FF) flattened a little to 65bps with markets being wobblyl, German curve (10Y Bunds-3M) at 9bps with 10Y Bunds at -0.62%. High Yield Spreads stable around 5.
-> Commodities (ex oil): Gold lost 1.7% this week.
-> Oil: not much action, almost flat on week.
-> Currencies: DXY (Dollar Index) +0.7%% on week, EURUSD -1.0%.
Major macro events: (times are CET; source: tradingeconomics.com):
Next Week’s major macro events:
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