Markets boosted by possible US airlines relief package
S&P gained after US lawmakers' openness to an airline-relief bill
Futures rose in Hong Kong and Australia, following the S&P 500's 1.7% overnight advance after US House speaker Nancy Pelosi boosted the markets by signalling openness to an airline-relief bill in talks with treasury secretary Steven Mnuchin after President Donald Trump shut down broader negotiations. Investors also expect Joe Biden, if elected, would quickly spend money to stimulate growth. Furthermore, minutes of the US Federal Reserve's September meeting released on Wednesday, also hinted at more easing.
Michel Barnier, EU's chief negotiator, told a meeting of European ambassadors that he didn't expect the UK to walk away on Oct. 15, despite renewed threats from London to pull out of the trade talks if the EU doesn't budge. Officials suggest an elaborate choreography is being worked out where both sides will find a way to carry on discussions into the second half of October, adding they won't be pressured into making concessions and are prepared to call the British prime minister's "bluff" if he doesn't compromise. Beyond the public statements, there are signs that the two sides are getting closer to overcoming the two main issues, state subsidies and fishing rights. Bank of England Governor Andrew Bailey said he believed Britain and the European Union should be able to reach a trade deal, and that he did not expect the new wave of coronavirus cases to be as damaging as the first.
Spanish Prime Minister Pedro Sanchez unveiled a 72 billion-euro stimulus plan, 80% of which will come from the EU's recovery fund, to help the embattled economy rebound from one of region's deepest contractions and a resurgent coronavirus outbreak. Investors have become increasingly worried Spain could be Europe's worst-hit from the coronavirus. Brussels also closed all bars while France and even the Czech Republic posted record increases in coronavirus cases, underscoring growing alarm in the region as it struggles with the pandemic.
Revived hopes for US fiscal stimulus improved investor sentiment hurting the dollar and the yen, while the prospect of negative interest rates knocked the New Zealand dollar lower. The Japanese yen sunk to a three-week low falling below the 106 key level to the USD. The greenback also struggled to recoup losses against other majors, excluding the kiwi. The euro edged up to $1.1760. The risk-sensitive Australian dollar rose 0.3% to $0.7164 while Sterling traded 0.3% higher at $1.2960.
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