Trump vs Biden, Brexit talks, US labour data

Hopes of a global recovery due to the easing of restrictions over the summer are fading as the fourth quarter begins this week and countries adjust to the idea that more permanent economic measures will be needed to fight the pandemic.

The US labour market data out on Friday will help analysts gauge the strength of the recovery in the world’s biggest economy. The unemployment rate stood at 8.4 per cent in August, and while it is expected to fall to 8.2 per cent in September, only half of the jobs lost since the outbreak began will have been regained. Crucially, the rate of jobs growth has slowed markedly since June.

In Europe, the inflation reading for September, also out on Friday, will provide the European Central Bank and investors with a better idea of how the coronavirus pandemic is weighing on the prices of consumer goods after a poor reading for August.

In the UK, chancellor Rishi Sunak has introduced job retention plans that will replace furlough schemes. Restaurant and pub workers, meanwhile, are bracing for the winter months as further measures to contain coronavirus take hold.

Elsewhere, the central banks of India and the Philippines will be reviewing their rates after being crushed by Covid-19.

Uber dominates the companies news with its appeal case that will conclude on Monday, revealing whether the company can keep its London operating licence.

The Boohoo saga also continues as the fast-fashion company releases its latest earnings update and reacts to the results of an independent inquiry into its supply chain.

Presidential debate: Trump vs Biden

On Tuesday US president Donald Trump will face Joe Biden, the Democratic nominee, in the first of three presidential debates. Fox News anchor Chris Wallace will moderate the debate, which will be held at Case Western Reserve University in Cleveland.

Mr Wallace has selected the six topics to be discussed on Tuesday, including the Supreme Court, Covid-19 and race and violence in US cities. The debate starts at 9pm eastern time and the two candidates will have a 15-minute time segment for each of the six topics for a total of 90 minutes.

Commentators say presidential debates have rarely determined the results in the US, but this is set to be one of the most interesting events of the race ahead of election day on November 3.

Further reading

Brexit talks

Brexit negotiations resume on Monday in Brussels after David Frost, prime minister Boris Johnson’s EU adviser, and chief negotiator Michel Barnier met for informal talks last week in London. Expectations of a sudden breakthrough are low.

The internal market bill has sparked a storm in the discussions, leaving the EU wondering whether Mr Johnson would be ready to walk away from the deal and establish an independent regime with a UK regulator for its internal market. The ninth round of negotiations will close on Friday.

Further reading

Elsewhere . . . 

  • South Korean export data is expected to show its first increase in seven months, which comes after the country has swung between low and high coronavirus infection rates

  • The Italian government is set to discuss on Monday economic measures to implement previous stimulus packages, including a job retention programme, VAT payment relief plans and support schemes for the travel industry

Companies news and earnings

Uber will find out on Monday whether its appeal against London’s transport regulator’s decision to strip the taxi app of its operating licence has been successful. Transport for London has previously raised concerns over passenger safety, identity fraud and the employment of unlicensed drivers at the San Francisco-based company.

Monday will also be the first day of trading for Siemens Energy shares, which have a target valuation of up to €20bn. The German spin-off is seen as a strategy to raise the value of the big conglomerate.

Boohoo, the UK-based online fashion retailer, is scheduled to issue its half-year earnings on Wednesday. An independent inquiry into the company’s supply chain, led by lawyer Alison Levitt, has found widespread instances of dangerous working conditions and underpayment of staff.

The fast fashion boom over the summer is expected to boost H&M earnings on Thursday. The Swedish retailer has benefited from an increase in consumer spending, but the next phase of the pandemic could change the retailer’s outlook if unemployment rises.

The lack of an online shopping platform is likely to affect the annual results of Aldi UK on Monday. Analysts forecast a loss of market share for the supermarket group as consumers have shifted their shopping habits during the pandemic.

British bakery chain Greggs is due to issue its third-quarter earnings update on Tuesday. The retailer is expected to have witnessed a boost in sales over the summer, but as the return to offices has hit a halt and the government renews the call to stay at home, the retailer’s future is at risk.

Others reporting this week include Chinese electric car start-up Nio, the US cruise operator Carnival Corporation, US food and drink company PepsiCo, Thai rubber gloves maker Top Glove and US fizzy drinks group Constellation Brands.

Central banks

Investors interested in European monetary policy will be following the European Central Bank conference on Wednesday with live panels in Frankfurt and online sessions.

ECB president Christine Lagarde is among the speakers together with ECB chief economist Philip Lane, Bundesbank’s chief Jens Weidmann, Banque de France’s governor François Villeroy de Galhau and Bank of Spain’s governor Pablo Hernández de Cos.

ECB policymakers are facing yet more pressure to support the economy, as inflation drifts further from its target of slightly less than 2 per cent. The eurozone slid into deflation for the first time in four years last month with headline consumer price inflation at minus 0.2 per cent.

Further reading

As a second wave of infections gathers pace and more travel restrictions are implemented across the world, analysts expect central banks to keep interest rates on hold.

On Monday, Ghana’s central bank is set to keep the rates steady at 14.5 per cent, while Colombia will release its minutes.

No changes are on the horizon for Kenya on Tuesday, which is expected to stick with its benchmark rate at 7 per cent.

Analysts will be closely watching the meetings in India and the Philippines on Thursday because the two countries have been hit particularly hard by coronavirus. India’s repurchase rate is 4 per cent, while in the Philippines the overnight borrowing rate is steady at 2.25 per cent.

Economic data

Investors are expecting a rebound in data for third-quarter gross domestic product across much of the world on Wednesday after a dramatic fall in the second quarter.

In the UK, GDP plunged in the second quarter by a record 20.4 per cent quarter on quarter during lockdown.

Canada’s GDP is forecast to have reached an increase of 2.8 per cent in July, a growth trend that has been running for three moths.

US labour market data on Friday will help build a clearer picture of the winning and losing sectors of the Covid-19 crisis. Meanwhile, the monthly unemployment rate will provide an insight into the finances of American households; depending on the results there will be a cascade of effects in the bond and stock markets.

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