Stocks Mixed Amid Tech Slide on Big Options Day

Stocks were mixed as giant technology companies dropped amid Friday’s expiration of equity options. Earlier gains were driven by better-than estimated economic data. The dollar fell. The S&P 500 rose by 0.01% to 3,483.81 while Dow Jones was up 112.11 points (0.39%) to 28,606.31.

US Budget Gap Triples to Record US$3.1trn on Virus Relief

The US budget deficit more than tripled to a record US$3.1trn in the latest fiscal year on the government’s massive spending aimed at softening the blow from the coronavirus pandemic. The increase brought the deficit as a share of gross domestic product to 16% in the year ending in September, the largest since 1945, a Treasury Department report showed. At the end of the financial crisis in 2009, the ratio was close to 10% before slowly narrowing through 2015.

Fed’s Bostic Cautions That US Economic Recovery Is Very Uneven

Some parts of the US economy are coming back strongly while others are still struggling because of the coronavirus pandemic, said Federal Reserve Bank of Atlanta President Raphael Bostic. In some segments the economy is recovering and rebounding in a very robust way, Bostic said. But in other segments, things like hotels and restaurants, small businesses, particularly in minority and lower-income communities, those places are seeing much more difficult situations.

ECB’s Lagarde Says Virus Curbs Will Bolster Economic Uncertainty

New restrictions being rolled out across the euro area to curb the surge of infections will increase uncertainty for companies and families, European Central Bank President Christine Lagarde said. The lop-sided impact that the pandemic has on services is particularly worrying as the sector accounts for 75% of employment in the 19-nation region, she said. That may slow the recovery and increase inequality.

UK Says Time Running Out for Brexit Preparation by Companies

The UK government is urging companies to step up preparations for leaving the European Union trading bloc without a new deal in place in eight weeks. Prime Minister Boris Johnson and Cabinet Minister Michael Gove will speak to business leaders and ask them to redouble their efforts, the government said in a statement. The Treasury is also writing to 200,000 traders about new customs and tax rules.

Singapore Says Employers Can Temporarily Cut Wages to Save Jobs

Employers in Singapore can consider implementing reasonable temporary wage cuts if such a move minimizes retrenchments, the National Wages Council said in a statement. Employers should seek employee support to do this and the burden of such cuts should not fall excessively on any one group, the Council said.

Thai Central Bank Extends US$16bn Soft Loan Program for SMEs

The Bank of Thailand extended its 500bn baht (US$16bn) “soft loan” program for small and medium-sized enterprises by six months to help with the effects of the lingering Covid-19 outbreak, the central bank said on its website. The central bank also relaxed rules to allow listed SMEs to join the low interest-rate lending program, which started April 23 and was due to end Oct. 22. Only 119bn baht has been approved to 71,008 borrowers so far, according to the announcement.

Oil Stable as Stimulus Hopes Run Up Against Fresh Virus Surge

Oil traded near US$41 as hopes for a last-ditch pre-election deal to inject more stimulus into the US’s pandemic-ravaged economy were countered by accelerating virus cases. Brent crude for December settlement declined by US$0.02 to US$42.91 per barrel.

Source: Affin Hwang Research - 19 Oct 2020