European bourses are seeing a mixed start on the open as the upbeat mood spills over from the US into Asia and fades into Europe. Markets are trading positively as investors track stimulus developments and President Trump’s health along with upbeat German Factory orders.
US President Trump has left the Walter Reed Medical Centre and is back in the White house, much to the relief of the markets. The President is planning on participating in the next Presidential debate on 15 October, narrowing some of the uncertainties surrounding these elections which had notched up when Trump fell ill. The losses that the equity indices experienced on Friday have been recovered, and some more. Asian stocks are trading at a two-week high.
US Stimulus Coming?
In addition to Trump’s health, the markets attention is also firmly on the prospects of additional US stimulus. US Speaker Nancy Pelosi and US Treasury Secretary Steve Mnuchin continue talks towards a deal. Any signs that more stimulus coming will boost risk appetite lifting riskier assets such as stocks whilst dragging on the US Dollar.
With the US elections a month away—which in market terms is a long time, the investors are almost more preoccupied with the prospects of additional stimulus right now, than who could be taking the keys to the White House. This is particularly the case given that previous support has expired.
German Factory Orders Smashed Forecasts
Adding to the upbeat mood German factory orders jumped 4.5% MoM in August, up from 2.8% in July and smashing expectations of 2.6% gains. The strong data comes following impressive German retail sales in the previous week and falling unemployment, raising optimism surrounding the economic recovery in the Eurozone’s largest economy.
The economic calendar is relative quiet across the session. Brexit headlines and a speech by ECB President Christine Lagarde could drive the somewhat subdued FX markets.
Oil Extends Gains
After a 5% rally in the previous session, oil is extending those gains for a a second straight session, clawing back losses from the end of last week when Trump fell ill. Oil is being supported by Trump’s return to the White House, the prospects of additional stimulus to counter the impact of the pandemic and as another storm threatens the Gulf of Mexico. An expanding strike in Norway which has so far resulted in the temporary closure of 6 offshore oil and gas fields has also helped buoy prices. Demand sentiment is supported by the prospect of a deal whilst supply side factors are tightening keeping oil elevated.
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