Daily market review

United States

Deadlock in fiscal-stimulus talks as well as broad increases in infection rates pulled US shares down sharply on Monday. The Dow industrials fell 2.3 percent, the S&P 500 1.9 percent, and the Nasdaq 1.6 percent.

Rising infection rates in the US and a lockdown in El Paso, Texas heightened uncertainty over the economic outlook. Travel-related shares were especially hard hit: American Airlines down 6.4 percent, United Airlines down 7.0 percent, and Royal Caribbean down 9.7 percent.

Energy shares were also lower including Chevron down 2.3 percent, ExxonMobil down 2.4 percent, and Hess down 4.9 percent.

Talks for new fiscal stimulus continued Monday, though reports said the White House and House of Representatives Speaker Nancy Pelosi were still at odds over state and local aide as well as health-care provisions.

Up 33.9 percent from the pre-virus month of February, new home sales in the US slowed 3.5 percent in September to a 959,000 annual rate. But home builders weren't marking down their offerings as the median price rose 1.4 percent in the month to $326,800. The national activity index, despite strength in housing, also slowed, to 0.27 in September from 1.11 reflecting a decrease in production and slowing recovery in employment.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell $1.44 to US$40.33 while spot gold rose US$0.22 to US$1902.27. The US dollar rose against most major currencies. The US Treasury 30-year bond yield fell 4 basis points to 1.60 percent while the 10-year note yield was also down 4 basis points at 0.80 percent.


New lockdowns, in reaction to rising infection rates, triggered heavy selling in European shares: France's CAC down 1.9 percent, Italy's FTSE MIB down 1.8 percent, and Spain's Ibex down 1.4 percent.

Cases are spiking in France, to 52,000 on Sunday for a sharp increase from prior weeks and to overtake Spain with the highest overall total in Europe; Italy announced new lockdowns that will include theaters, gyms, and swimming pools; Spain is imposing curfews and restricting travel.

Germany's DAX fell especially hard, down 3.7 percent after software giant SAP cut guidance on Covid effects. Shares of SAP tumbled more than 20 percent.

In economic data, Germany's Ifo survey showed a deterioration in business sentiment in October after five consecutive months of improvement, reflecting the recent spike in Covid cases across Europe and the re-tightening of restrictions. Ifo's business climate indicator fell from 93.2 in September to 92.7 in October, slightly below the consensus forecast for a decline to 92.9. Weakness was centered in services and construction, offsetting better conditions in manufacturing.

Asia Pacific

Most major Asian markets closed lower Monday though moves were generally moderate, with a light regional data calendar keeping the focus on broader Covid developments. The Shanghai Composite index underperformed with a fall of 0.8 percent as senior Communist Party officials began a series of high-level meetings in Beijing this week to discuss economic plans for the next five years. Japan's Nikkei and Topix indices fell 0.1 percent and 0.4 percent respectively, while Australia's All Ordinaries index closed down 0.3 percent. Markets were closed for a holiday in Hong Kong.

Singapore industrial production data for September showed strong growth centered in pharmaceuticals outside of which, however, conditions mostly weakened. Production rose 24.2 percent on the year in September after increasing 15.4 percent in August and rose 10.1 percent on the month after increasing 15.5 percent.

Looking ahead*

Chinese industrial profits, New Zealand merchandise trade and Hong Kong merchandise trade will be posted in Asia. From Europe, data on tap are French PPI, ECB's lending survey, Eurozone M3 money supply, and CBI distributive trades from the UK. US data will include durable goods orders, house price indexes from both Case-Shiller and FHFA, as well as consumer confidence and the Richmond Fed manufacturing index.

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