Stimulating hopes, jobless claims and bank stocks


© Reuters.

By Geoffrey Smith – Stocks Rise in Hope of New Stimulus Package; unemployment claims and personal income statistics are released, while three more Fed speeches are also expected. The Fed extends its cap on bank dividends and its buyout ban, and eurozone manufacturing is having its best month in two years. What you need to know about the financial markets on Thursday, October 1.

1. Stimulus package still possible

Assets fell and risk assets rose in hopes the United States will be able to whip up a new stimulus package before the election after all.

Treasury Secretary Steven Mnuchin said he had had “productive” talks with House of Commons Speaker Nancy Pelosi, amid reports the two sides are now only separated by $ 600 billion in their opinion on the price of the sticker. According to the Wall Street Journal, the two agreed that the package should contain a new round of stimulus checks for households, which analysts see as key to supporting consumer spending.

Pressure on the administration to strike a deal increased after a series of announcements of large-scale job cuts from the airline industry, Disney and, Wednesday, insurer Allstate (NYSE :). President Donald Trump’s inability to make headway on Joe Biden’s lead in the polls in Tuesday’s heated debate may also have helped.

2 jobless claims, ISM due

It’s a data-rich day, with weekly jobless claims at 8:30 am ET (12:30 GMT) topping the bill, with personal income and expense data for August also due at the same time. They will be followed by the ISM Manufacturing survey at 10 a.m.

remained stable at just over 850,000 per week last month, and they are expected to return to that level this week. , which are reported with a one-week lag, are expected to have fallen from 350,000 to 12.25 million. The data comes a day after a surprisingly strong private payroll report for the month through mid-September, which showed hiring was growing at a steady pace.

Elsewhere, there will be speeches from the Philadelphia Fed President at 9:30 a.m. ET, his New York counterpart at 9:00 a.m. and the Fed Governor at 3:00 p.m. ET.

3. Stocks should open higher; Pepsi gains beat

US stocks are expected to open the fourth quarter with strong gains, on renewed hopes of a budget support package. Those hopes had faded in recent weeks, with both parties in Congress refusing to quit their respective negotiating positions.

As of 6:30 a.m. ET, were up 218 points, or 0.8%, while they were up 0.9% and up 1.3%.

Stocks likely to be targeted later include Pepsico (NASDAQ :), which reported earnings some 12% ahead of previous forecast, but warned that headwinds in the currency would hit its annual profit. Palantir (NYSE :), which weakened to close on Wednesday after debuting via direct listing, will also be the center of attention.

4. Fed extends restrictions on bank dividends and buybacks

Bank stocks will also be at the center of concerns, after the Federal Reserve extended its cap on dividend payments and its ban on share buybacks until the end of the year.

The Fed has said it wants banks to maintain a high degree of capital resilience: this is a sign it fears that $ 40 billion in loan loss provisions in banks’ second-quarter results will be far from the last word in the current credit cycle.

JPMorgan (NYSE :), in particular, had raised investors’ hopes that it could resume buybacks in the fourth quarter.

5 The euro area PMI reaches its highest level in two years; Sterling slips on Brexit

Eurozone factories rebounded in September, according to the monthly IHS Markit Purchasing Managers Index.

The eurozone fell from 51.7 to 53.7 in August, its highest level in two years, while the decline in producer price inflation caused by the pandemic also eased more than expected.

However, the news was not all good from Europe: the European Commission slipped again, after the European Commission said it would take legal action against the UK for violating the terms of the Withdrawal Agreement governing the post-Brexit transition. Reports also suggest that EU leaders would refuse to accept the UK’s current negotiating position on state aid when the transition period expires at the end of the year.


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