Stocks Drop As Virus Spreads, Brexit Talks Begin
Fiona Cincotta June 29, 2020 2:24 AM
Markets have kicked off the week in a depressed mood amid gloomy coronavirus developments. Brexit trade talks begin.
Markets have kicked off the week in a depressed mood amid gloomy coronavirus developments, overshadowing vaccine developments and encouraging data from China. As the number of cases worldwide reaches 10 million and the death toll strikes 500,000, concerns over rising coronavirus cases and second wave fears continue to drive risk sentiment. California’s governor has ordered the immediate closure of all bars in 7 counties, with 8 other counties advised to implement similar closures.
This is an important week for data, with PMI’s, UK GDP and US payrolls as well as Federal Reserve Chair Jerome Powell speaking tomorrow. Whilst data is expected to show that the worst is behind us, a double dip recession could well be on the cards if lockdowns are widely re-imposed.
Whilst the US Dollar has often advanced when risk sentiment stutters and stocks fall, that hasn’t been the case this morning, the USD is trading off versus its major peers.
Pound Advances, Brexit Trade Talks Begin
USD weakness, in addition to Boris Johnson’s spending plans are helping the Pound pick up off monthly lows as the next round of post Brexit trade talks begin today. Pound traders will be watching the headlines carefully, any leaks of lack of progress could drag on demand for Sterling. Heading into the talks the EU is looking for compromise, whilst the UK is appearing less flexible as key issues such as fishing, EU judicial power and “the level playing field” remain contentious. Any hint of these being overcome could boost the Pound. Traders could also seek solace in silence ahead of update from EU chief negotiator Michel Barnier at the end of the week.
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