Daily Market News: Trump catches Covid; Congress approves $2.2trn stimulus package

Adam Vettese, UK Market Analyst at eToro, has provided his daily commentary on traditional and crypto markets for October 2, 2020.

Donald Trump and his wife Melania have tested positive for Covid-19 and will now quarantine themselves, barely a month before the US presidential election. This could seriously impact his campaigning schedule.

The President confirmed the news on Twitter, saying:

Tonight, @FLOTUS and I tested positive for COVID-19. We will begin our quarantine and recovery process immediately. We will get through this TOGETHER!

Speculation about his health and age are now set to dominate the airwaves, with Trump – at 74 and technically obese – in the danger zone for the virus.

Markets have slipped as a result with the FTSE and Dax down 0.6% each and US futures indicating a 1% lower open at time of writing.

The news broke after the Democrat-controlled US House of Representatives approved a $2.2trn fiscal stimulus package on Thursday evening, that is yet to receive the backing of the White House or Republican lawmakers. Talks between the groups are anticipated to continue after the vote, as the bill still needs to clear the Republican controlled Senate. Per The Wall Street Journal, the parties are around $600bn apart at the last count, with key points of contention, including funding for state and local governments.

forex and crypto market analysis

The House vote came after a variety of economic data was released on Thursday, which contained some potential red flags. Personal income fell 2.7% in August, while initial weekly jobless claims remained stubbornly high at 837,000. The week has been littered with news of major corporate job cuts coming down the pipeline, and the US recovery threatens to stall without more federal aid.

Exxon loss warning sinks energy sector

Despite some worrying data points, investors reacted positively to Thursday’s economic data deluge, which also included an improvement in the IHS Markit Manufacturing Purchasing Managers’ Index for September. The Nasdaq Composite closed the day 1.4%, while the S&P 500 was up 0.5% and the Dow Jones Industrial Average eked out a 0.1% gain. There was a huge disparity between the different sectors of the S&P 500, with energy stocks sinking 3.1% overall while consumer discretionary stocks soared by 1.5%. At the top of the index were e-commerce firm Etsy, sportswear maker Under Armour and streaming giant Netflix, which gained 8.3%, 5.6% and 5.5% respectively. Bringing up the back were oilfield services business Halliburton and fuel manufacturer Valero, which both fell by around 7%. The slump among energy names came after Exxon Mobil revealed that it has likely posted a third consecutive quarter of losses in Q3, putting pressure on its dividend, according to Bloomberg.

  • S&P 500: +0.5% Thursday, +4.6% YTD
  • Dow Jones Industrial Average: +0.1% Thursday, -2.5% YTD
  • Nasdaq Composite: +1.4% Thursday, +26.2% YTD

BP and Shell at 25-year lows

The FTSE 100 and FTSE 250 both delivered marginal gains on Thursday, even as oil giants BP and Royal Dutch Shell saw their share prices fall to 25-year lows, per The Telegraph. BP closed the day 3.1% lower, with Royal Dutch Shell down 3.7%, as oil prices fell back below $40 a barrel once more. Rolls Royce suffered another major loss, falling 10.2% after announcing it will seek five billion pounds through debt and a rights issue to bolster its finances in the face of “significant uncertainty” regarding the pandemic recovery. Rolls Royce stock has now fallen 46.5% over the past month, and 82.9% year-to-date, taking its market cap below the three billion pound market. In the FTSE 250, food maker Premier Foods and Liontrust Asset Management helped take the index higher, closing the day up 7.7% and 6.5%.

  • FTSE 100: +0.2% Thursday, -22.1% YTD
  • FTSE 250: +0.4% Thursday, -20.6% YTD

What to watch

Jobs report: All eyes will be on the monthly US jobs report on Friday that will include new nonfarm payrolls for September (which counts employment in most industries, excluding farm workers and a few other classifications). September’s unemployment rate will also be revealed. Almost 1.4 million nonfarm payrolls were added in August, and expectations are for a more muted figure for September. Economists polled by MarketWatch expect that the US economy added around 800,000 jobs in September, which would be the first month since May where the figure has come in at less than 1 million.

Little change is anticipated in the unemployment rate, which has come down far more rapidly than many expected, although it is unclear how accurate the data is. Some respondents to the government’s survey are likely indicating they are employed while on furlough, even if the likelihood of being brought back to work is nonexistent.

Earlier in the week, payroll service provider ADP’s private sector jobs report showed that private firms added 749,000 jobs in September versus the 600,000 figure expected. A better than expected result in that report is not indicative that the same will happen with Friday’s Bureau of Labor Statistics figures.

Crypto corner: Cryptoasset exchange founders arrested

Founders of the pioneering crypto-derivatives exchange BitMEX have been charged with evading laws around money laundering and hit with civil sanctions, abruptly sending the price of Bitcoin down.

Arthur Hayes, Benjamin Delo and Samuel Reed were indicted in New York, according to numerous reports, with federal prosecutors claiming the digital-asset exchange served American customers while flouting US banking laws. Hayes said the exchange was incorporated in the Seychelles because they could bribe authorities there for the cost of “just a coconut,” according to the indictment, unsealed Thursday.

“They will soon learn the price of their alleged crimes will not be paid with tropical fruit, but rather could result in fines, restitution, and federal prison time,” FBI Assistant Director William F. Sweeney Jr. said in a statement. The Commodity Futures Trading Commission brought a parallel civil action.

Bitcoin dropped in response to the news, the price as much as  2% this morning at $10,410.

We strongly disagree with the US government’s heavy-handed decision to bring these charges, and intend to defend the allegations vigorously,” a spokesperson for the company said in a statement.

From our early days as a start-up, we have always sought to comply with applicable US laws, as those laws were understood at the time and based on available guidance.

All data, figures & charts are valid as of 02/10/2020. All trading carries risk. Only risk capital you can afford to lose.  

This is a marketing communication and should not be taken as investment advice, personal recommendation, or an offer of, or solicitation to buy or sell, any financial instruments. This material has been prepared without having regard to any particular investment objectives or financial situation, and has not been prepared in accordance with the legal and regulatory requirements to promote independent research. Any references to past performance of a financial instrument, index or a packaged investment product are not, and should not be taken as, a reliable indicator of future results. eToro makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared utilizing publicly-available information.

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