Stocks Fall as Stimulus Hopes Fade, Banks Slump

Stocks dropped after Treasury Secretary Steven Mnuchin down played the chances of striking a stimulus deal before the election. The S&P 500 fell by 0.66% to 3,488.67 while Dow Jones was down 165.81 points (0.58%) to 28,514.00.

Fed’s Clarida Says Economic Recovery Has ‘long Way to Go’

Federal Reserve Vice Chairman Richard Clarida said the US economy faces a long and uncertain road to regaining its pre-pandemic strength despite a faster-thanexpected initial rebound from the wreckage of the coronavirus pandemic. “While economic recovery since the spring collapse has been robust, let us not forget that full economic recovery from the Covid-19 recession has a long way to go,” Clarida said.

IMF Joins Powell and Lagarde Urging Governments to Keep Spending

The International Monetary Fund said more public spending will be needed to complete the economic recovery from coronavirus, joining central bankers and finance leaders who are urging governments to set aside fears about mounting debt for now. The Fund, historically a champion of budget restraint, published its most detailed study of the pandemic’s impact on public finances. It said global government debt will “make an unprecedented jump” this year, but it’s “not the most immediate risk. The near-term priority, instead, is to avoid premature withdrawal of support.”

France to Go Ahead With Digital Tax, Risking US Tariffs

France will go ahead with plans to collect its contentious digital services tax midDecember, Finance Minister Bruno Le Maire said, keeping Europe on course for a trade battle with the US over the taxation of tech giants like Facebook Inc. and Alphabet Inc.’s Google. The French government suspended the payment of its national levy on digital revenues as the US agreed to hold off on retaliatory tariffs.

German Recovery Loses Steam

Germany’s economy is losing steam but will do slightly better than government forecasts as fears grow over rising coronavirus infections, according to the country’ s five leading research institutes. GDP will contract by 5.4% in 2020 and grow 4.7% next year, the experts predicted in their latest bi-annual outlook. In their spring report, they expected a contraction of 4.2% this year and growth of 5.8% in 2021.

Australia’s central bank is reviewing three key issues on policy easing

Australia’s central bank chief Philip Lowe said he’s working through how much potential traction any further easing will gain, the potential effect on financial stability of such a move, and what international counterparts are doing before making any new policy moves. “We have been considering what more we can do to support jobs, incomes and businesses in Australia to help build that important road to the recovery,” Lowe said.

Thailand Set to Ease Rules on Outflows to Temper Currency Gain

Thailand’s central bank plans to further ease overseas investment rules by early next year, allowing more capital outflows so as to temper gains in the export-reliant nation’s currency. The Bank of Thailand may increase the limit on foreign currency deposits and allow money transfer between foreign currency deposits held by individuals and companies, Deputy Governor Mathee Supapongse told reporters.

Oil Rises With Dollar Decline Boosting Appeal of Commodities

Oil rose to its highest in nearly a week amid a weaker dollar and expectations for supply declines in US inventories. Brent crude for December settlement increased by US$0.87 to US$43.32 per barrel.

Source: Affin Hwang Research - 18 Oct 2020