Markets Up but Worries Remain

The Catch Up

- Asian market pushed higher today, after US markets recovered yesterday and some positive momentum is building up as news about a US fiscal plan to aid the recovery and stock bargain hunters have started putting money back in the markets.

- MSCI Asia-Pacific (ex. Japan) was positive, even though sentiment turned to the worst throughout the session, with Hong Kong's Hang Seng moving to a 0.7% loss compared to a 0.2% gain earlier in the session. CSI300 was up 0.4%, while Australia's ASX was down 0.8%.

- On the other hand, the Nikkei was 0.2% higher, despite earlier losses as Nippon Telegraph and Telephone Corp announced a $38 billion take-private of its wireless carrier business, paving the way for price cuts in the sector.

- US500 futures were in the green, moving to gain 0.33% throughout the day.

- Asian market developments were pushed by positive signs regarding China's economic recovery, although the coronavirus pandemic continues to worry and concern about high valuations continues.

- Investors will remain cautious ahead of the first U.S. presidential debate, and as lawmakers continue efforts to cobble together additional economic stimulus.

- US consumer confidence and home price data will be released later today, and are expected to help show how well the country is positioned to rebound from pandemic lockdowns, as well as how necessary more stimulus will be.

- Analysts note that the loss of momentum and the renewed rise in Covid-19 infection rates point to the need for additional fiscal and monetary support. To that end, US House of Representatives Speaker Nancy Pelosi said on Monday that Democratic lawmakers unveiled a new, $2.2 trillion coronavirus relief bill, which she said was a compromise measure that reduces the costs of the economic aid.

- As a result, Wall Street gained yesterday, particularly in hard-hit sectors like hotels, banks and airlines which posted sizeable gains after several days of decline.

- Still, with Covid-19 deaths rising above 1 million, Europe experiencing a rise in new infections and some US states continue to grapple with high case numbers, economic recovery is looking more and more weakened.

- In the currency markets, the USD dropped from a two-month high yesterday, albeit not much, as the 10-year bond yield fell by just half a basis point.

- On the other hand, Gold continues to rise, with futures moving to $1,884 per ounce.

- Oil prices on the other hand continue to drop, with WTI trading around $40.40 per barrel and Brent around $42.20 per barrel.

- Earlier today, the Tokyo CPI declined by 0.2%y/y, a better than expected result.



The Look-Out

- German and Spanish CPI and Italian PPI figures are expected today, but the release that stands out in Europe is the Business and Consumer Survey, which is expected to have increased to 89.5 against 87.7 in the previous month. Ont he other hand, consumer confidence is expected to have remained at negative 13.9.

- The S&P Case-Shiller house price index will be released later today, with forecasts suggesting that house prices had increased by 3.8%y/y in July.

- The Conference Board consumer confidence index is forecast to have improved to 89.2 in September, compared to 84.8 in August.

- For oil traders, API weekly crude oil stock is also expected to be released. A drawdown could mark the beginning of a strong move in oil markets.



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