Skip navigation Scroll to top
Scroll to top

LGT Navigator: Trump's return provides relief while the US Corona rescue package remains in limbo

October 6, 2020

The stock markets were relieved that Trump's health seemed to have improved and that the US President had already been able to return to the White House. However, a continuation of the regular presidential election program is by no means assured at this time, and at the same time a series of Covid-19 infections in the White House environment are causing a possible further delay in the corona aid package, which is controversial in Congress. Meanwhile, investors seem to be somewhat more cautious again according to the latest Sentix survey.

US corona relief package remains on hold

US President Donald Trump was able to leave the hospital and returned to the White House. How the (for the time being short) illness of the president so close to the election date will affect the Americans and whether this will have an influence on their decision, is currently questionable. It seems certain that Trump has by no means changed his attitude towards the coronavirus.

On Wall Street investors reacted positively to the quick recovery and the return of the president. The Dow Jones Industrial rose by +1.68% to 28 148.64 points and the broad-based S&P 500 also made an impressive start to the week with a daily gain of +1.82% (3 408.60 points). In Asia, too, the stock markets benefited from the return of the US President and climbed to a two-week high in some cases. In Tokyo, the Nikkei Index, which comprises 225 stocks, was up around +0.5%.

US Corona aid package remains in limbo

The infection of the US President with the coronavirus also has possible consequences for the work of the US Congress. For example, a vote on a corona aid package could be further delayed because three Republican senators also tested positive for Covid-19 and therefore had to go into quarantine. Mitch McConnell, Republican majority leader in the Senate, has already announced a recess until October 19. Meanwhile, Nancy Pelosi, Democratic President of the House of Representatives, expressed confidence and said: “We are making progress“. Earlier, the Democrats had put forward a compromise proposal for around USD 2.2 trillion. The Republicans' offer currently stands at USD 1.6 trillion.

American service providers more confident

Despite the still uncertain pandemic situation in the US, companies in the service sector surveyed by the Institute for Supply Management (ISM) industry association were more optimistic in September. The ISM purchasing managers' index improved from 56.9 points in the previous month to 57.8 points. Analysts had expected the index to cloud over to 56.2 points on average. The improvement in the employment component is also a particularly positive feature.

Sentix survey shows investors to be somewhat more cautious again

The monthly survey of around 1000 investors conducted by the German financial market analysis company Sentix showed a slightly more cautious assessment of the economic outlook for the eurozone in October. After the sentiment barometer had risen continuously over the past five months, reflecting the recovery from the peak of the corona pandemic, the indicator now dropped back by 0.3 points month-on-month to -8.3 points. Investors were most optimistic about the development in Asia. The corresponding indicator reached its highest level since the beginning of the year. According to Sentix, the investors surveyed reflected the increasingly better economic picture in China.

Recovery of the service sector in the eurozone falters

The final figures of the monthly purchasing manager surveys conducted by the London market research company IHS Markit confirmed that the recovery of the overall economy in the euro zone has stalled somewhat, following the brilliant recovery from the corona shock. The combined purchasing managers' index (PMI Composite) fell from 51.9 to 50.4 points in September. While the situation in the industrial sector appears to be relatively stable, the service sector is suffering from the renewed increase in the number of corona cases. Accordingly, the Purchasing Managers' Index for the service sector dropped from 50.5 to 48.0 points in September, which means that the sector has slipped back into contraction. The European services sector was hit particularly hard by the corona measures and the recovery has been much weaker than in industry in recent months.

 

Economic Indicators October 6

MEZ Country Indicator Last
08:00 GE Factory Orders (August, y/y) -7.3%
14:30 US Trade Balance (August) -USD 63.56bn

Earnings Calendar October 6

Country Corporate Period
SZ Aryzta Y

 

LGT helps you make informed investment decisions

All about global economic and market trends at a glance

Subscribe to LGT's research newsletters

Follow us on TwitterFacebook or LinkedIn, where we inform you about latest market developments and LGT News. Further informationen is available on: LGT Social Media.

Imprint
Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi, +41 44 250 78 59, E-Mail: lgt.navigator@lgt.com
Source: LGT Bank (Switzerland) Ltd.

Risk Disclosure (Disclaimer)
This publication is an advertising material / marketing communication. This publication is for your information only and is not intended as an offer, solicitation of an offer, or public advertisement to buy or sell any investment or other specific product. Its content has been prepared by our staff and is based on sources of information we consider to be reliable. However, we cannot provide any confirmation or guarantee as to its being correct, complete and up to date. The circumstances and principles to which the information contained in this publication relates may change at any time. Information that has been published should therefore not be understood as implying that no change has taken place since its publication or that it is still up to date. The information in this publication does not constitute an aid for decision-making in relation to financial, legal, tax-related or other consulting matters, nor should any investment decisions or other decisions be made on the basis of this information alone. It is recommended that advice be obtained from a qualified expert. Investors should be aware that the value of investments can fall as well as rise. Positive performance in the past is therefore no guarantee of positive performance in the future. Investments in foreign currencies are also subject to fluctuations in exchange rates. We disclaim all liability for any loss or damage of any kind, whether direct, indirect or consequential, which may be incurred through the use of this publication. This publication is not intended for persons subject to legislation that prohibits its distribution or makes its distribution contingent upon an approval. Any person coming into possession of this publication shall therefore be obliged to find out about any restrictions that may apply and to comply with them. In line with internal guidelines, persons responsible for compiling this report are free to buy hold and sell the securities referred to in this report.

US employment growth remains dynamic at the beginning of the year