News & Analysis

Tech Stocks, ECB Meeting and Brexit Talks in Focus

September 7, 2020

By Deepta Bolaky
 @DeeptaGOMarkets

With a US public holiday on Monday, investors are gearing up for a muted start to the week. After the sell-off in the global stock market last week, an environment of caution may prevail while investors continue to monitor economic updates to gauge the path of the global recovery. 

September kicked off on a mixed note – global equities pulled from recent highs after a sell-off in the tech sector triggered a bloodbath in the stock market. Investors will likely remain on edge this week after major equities indices plunged the most in almost 3 months last week. 

Central Bank Meetings

The European Central Bank (ECB) and Bank of Canada (BoC) will hold their policy meetings on Wednesday and Thursday respectively. The ECB meeting will be among the most important events for the week following last week’s comments from the ECB chief economist, Philip Lane that Euro’s recent appreciation “matters” for monetary policy. 

The immediate attention will be on Christine Lagarde’s views on the Euro appreciation to see if her comments matched those of the chief economist. Moreover, investors will look for inflation and interest rates expectations. As per the recent statistics, inflation in the Eurozone has turned negative. 

“In August 2020, a month in which COVID-19 containment measures continued to be lifted, Euro area annual inflation is expected to be -0.2%, down from 0.4% in July according to a flash estimate.”

Brexit Talks

Over the weekend, Brexit-related updates dominated headlines and there were no reassuring tones from Prime Minister Boris Johnson. Ahead of the 8th round of negotiations between the European Union and the United Kingdom which is scheduled to take place from Tuesday 8 September to Thursday 10 September 2020 in London, the Prime Minister threatened to walk away from trade-deal talks and reiterated that no-deal Brexit would be a “good outcome for the UK”. It is also noted that the Prime Minister is drawing up legislation that may override the Brexit withdrawal agreement on Northern Ireland.

GBP currency pairs might have a volatile ride this week as more updates will unfold during the negotiations process. 

Key Economic Data to Watch

EZ and UK GDP and inflation data across Australia, the US and UK 

will stand out as market participants will continue to monitor main lagging and leading indicators to see how the economy has changed and attempt to gauge where the economy is headed.

Commodities

Gold

Last week was another volatile week for Gold. After reaching fresh record highs, the precious metal plunged and slipped the most in seven years last week. Gold reclaimed the $2,000 level as risk sentiment faltered on Tuesday earlier this week but failed to hold on to gains. As of writing, the XAUUSD pair is trading around the $1,933 level.

Virus woes, US stimulus package, and geopolitical tensions are the current factors that could provide support to the haven asset.

Key Events Ahead

Monday

  • Trade Balance, Exports, and Imports (China)
  • Leading Economic Index (Japan)
  • Industrial Production (Germany)

Tuesday

  • BRC Like-For-Like Retail Sales (UK)
  • Overall Household Spending, Current Account and GDP (Japan)
  • Trade Balance (Germany)
  • Gross Domestic Product (Eurozone)
  • Inflation Report Hearings (UK)

Wednesday

  • Westpac Consumer Confidence (Australia)
  • Consumer Price Index (China)
  • Unemployment Rate (Switzerland)
  • 10-y Bond Auction (Germany)
  • BoC Rate Statement and Interest Rate Decision (Canada)

Thursday

  • Consumer Inflation Expectations (Australia)
  • NIESR GDP Estimate (UK)
  • ECB Interest & Deposit Rate Decision and ECB Monetary Policy Statement and Press Conference (Eurozone)
  • PPI, and Jobless Claims (US)
  • BoC’s Governor Macklem Speech (Canada)

Friday

  • Business NZ PMI (New Zealand)
  • Eurogroup Meeting (Eurozone)
  • Manufacturing & Industrial Production and GDP (UK)
  • Harmonized Index of Consumer Prices (Germany)
  • Consumer Price Index and Monthly Budget (US)

By Deepta Bolaky
 @DeeptaGOMarkets

Tuesday, 08 September 2020 
Indicative Index Dividends
Dividends are in Points
ASX200 WS30 US500 US2000 NDX100 CAC40 STOXX50
1.135 0 0.148 0.017 0 0 0
ESP35 ITA40 FTSE100 DAX30 HK50 JP225 INDIA50
0 0 0 0 0 0 0


Disclaimer:  The articles are from GO Markets analysts,  based on their independent analysis or personal experiences. Views or opinions or trading styles expressed are of their own;  should not be taken as either representative of or shared by GO Markets.  Advice (if any),  are of a ‘general’ nature and not based on your personal objectives, financial situation or needs.  You should therefore consider how appropriate the advice (if any) is to your objectives, financial situation and needs, before acting on the advice.  If the advice relates to acquiring a particular financial product, you should obtain and consider the Product Disclosure Statement (PDS) and Financial Services Guide (FSG) for that product before making any decisions.

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