Stocks Gain Most in Almost Four Weeks; Yields Rise

US stocks closed at the highest levels of the day amid optimism that President Donald Trump will leave the hospital and lawmakers will move closer to providing more stimulus. Treasury yields jumped and the dollar weakened. The S&P 500 rose by 1.80% to 3,408.63 while Dow Jones was up 465.83 points (1.68%) to 28,148.64.

Fed’s Evans Says He’d Welcome 2.5% Inflation Rate in US

Federal Reserve Bank of Chicago President Charles Evans said he would welcome 2.5% inflation in the US for a time in order to average out the current period in which price pressures are running below the central bank’s 2% target. “I think we have to cross over, beyond 2%, with some momentum,” Evans said.

BOE’s Haskel Says He Stands Ready to Vote for More Stimulus

Bank of England policy maker Jonathan Haskel said he’s prepared to back more monetary support for the UK if necessary as he warned that the near-term risks to the economy lie to the downside. Haskel, considered one of the more dovish members of the Monetary Policy Committee, helped lead the charge for the BOE’s previous round of stimulus. He said that a “material amount” of spare capacity has emerged and that he anticipates a temporary period of subdued inflation pressure.

Two-speed Europe Sees Germany Thriving as Rest of Region Suffers

Germany was the only euro-area country to record solid economic growth in September, with much of the rest of the region suffering amid weakness in services. While a global trade pickup is helping industry recover from the coronavirus pandemic, benefiting export-oriented Germany, many countries in the region’s south are more heavily reliant on tourism and hospitality. Those sectors remain badly affected by the crisis, especially with infections rising again.

UK Services Show Resilience in Face of Mounting Virus Risks

The UK’s dominant services sector grew faster than initially reported last month even as risks from the virus and Brexit stacked up and government support was withdrawn. IHS Markit’s Purchasing Managers Index for the industry stood at 56.1 in September, slightly above a flash estimate, and well above the 50 level that indicates growth. A gauge for the whole economy also came in slightly higher.

Indonesia Passes Law to Simplify Labor, Investment Rules

Indonesia has rushed the approval of a law aimed at creating jobs and attracting investments, a day before 2 million workers were set to stage a three-day strike to reject it. The parliament agreed to pass the omnibus bill on jobs in a plenary meeting on Monday. The law that seeks to simplify and revise more than 70 existing regulations will overhaul the country’s labor rules, make it easier for companies to secure permits and ease foreign ownership requirements.

Singapore’s Budget to Feel Virus Strain for Years, Deputy PM Says

Singapore’s budget will likely be challenging for a number of years as officials look to balance fiscal sustainability with generous aid amid a long recovery, and signaled that higher taxes may be on the line. Operating revenues this financial year will probably be 16% lower than the government estimated in February, Deputy Prime Minister Heng Swee Keat said.

Oil Extends Gains Towards US$40 on Optimism for More US Stimulus

Oil extended gains in Asia on growing optimism for more US fiscal stimulus to help lift the world’s largest economy out of recession. Brent crude for December settlement rose US$2.02 to US$41.29 per barrel.

Source: Affin Hwang Research - 6 Oct 2020