Market Round-up: 19-23 October

Thomas Watts

With the end of the previous week yielding no signs of an accord between the UK and EU’s negotiators over a post Brexit trade agreement, the beginning of the current week started with optimism that the chasm between the two sides could be bridged.


This Week

Monday saw the FTSE 250 index, often considered a barometer for Brexit sentiment, close 0.2% up, boosted by sharp rise in property exposed firms such as housebuilders and estate agents, as investors looked to more cyclical sectors. Any gains were capped however, with negotiations hanging by a thread. Britain and the EU agreed to ‘intensify’ trade talks and work on legal texts, a breakthrough of sorts after Prime Minister Boris Johnson said he would walk away from the table if the EU refused to make concessions. 

Affairs remained incredibly delicate on the domestic front, highlighted by ratings agency Moody’s cutting the UK debt rating last week, hindered further by the uncertainty raised by Wales and South Yorkshire having to go into lockdown. After the Bank of England also warned that more dire financial data could be on its way, investors looked towards the Chancellor of the Exchequer, Rishi Sunak, who outlined  a new rescue package for struggling businesses on Thursday. With the current furlough scheme set to end in November under the revised programme, employers will pay less, and staff can work fewer hours before they qualify whilst taxpayer subsidy has been doubled. The afternoon of the announcement saw domestically exposed stocks rally around 0.5%.

It was not only in the UK that investors cheered efforts to get the economy back on track, as across the pond markets also rallied on their central Bank’s renewed efforts. Tuesday saw US equities rise sharply, fed by investor optimism that a deal would be reached in Washington to provide new relief measures and help the US economy withstand the impact of the Coronavirus pandemic before the upcoming elections there. News broke that US President Donald Trump was pushing for a comprehensive COVID-19 relief package, saying he would accept a deal worth more than $2.2 trillion despite opposition to large spending measures among his fellow Republicans in the US Senate.

Next Week

As the UK and EU negotiators attempt to hammer out some sort of semblance of a Brexit deal, the coming week should once again be dominated by noise from Westminster and Brussels over the proximity of an agreement.

It seems that the issue of fish is now the main sticking point, with the UK wishing to take back control of its waters whilst the EU still wants to maintain access. It is believed that as both sides are back at the table, most issues can now be worked through, however, fisheries hampering an accord are “still very much there” according to Ireland’s foreign minister.

Although such news should dominate news flows, investors will be relieved to start the week in a different Plaice entirely as the US Census Bureau releases its Durable Goods Orders data. Detailing the change in the total value of new purchase orders placed with manufacturers for durable goods, the numbers are particularly useful in that they act as a leading indicator of production - rising purchase orders signal that manufacturers will increase activity as they work to fill the orders.

Remaining hooked on events across the pond, Thursday sees the US release its quarter on quarter GDP figures, possibly one of the most important pieces of data when assessing the health of the world’s largest economy. As trade starts to open up again after the worst of the Coronavirus outbreak having hopefully passed, many market commentators are hoping to see something of a bounce back from July’s historic quarterly contraction of 32.9%.

With economic data releases to trawl through sparse on domestic shores this week, the Sole piece of noteworthy news from the continent comes in the form of a European Central Bank (ECB) address. Held only eight times a year, it has become the primary tool the ECB uses to communicate with investors about monetary policy. It contains the outcome of their decision on interest rates and commentary about the economic conditions that influenced them when Mullet-ing over their decision. Most importantly, it discusses the economic outlook and offers clues on the outcome of future decisions, piquing many traders interest.


The information in this blog or any response to comments should not be regarded as financial advice. If you are unsure of any of the terminology used you should seek financial advice. Remember that the value of investments can go down as well as up, and could be worth less than what was paid in. The information is based on our understanding in October 2020.