Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Some familiar themes are weighing on the markets today. There’s just two weeks until the US presidential election, and fears of a contested results abound. The Covid-19 pandemic continue to rage, with Argentina becoming the 5th country to report 1m cases.
Today is also the deadline to agree a pre-election US stimulus package, set by House speaker Nancy Pelosi. She’s due to speak with US Treasury secretary Steven Mnuchin again today, in a final push to close the gap between the two sides.
Pelosi’s spokesman, Drew Hammill, tweeted overnight that the two sides are narrowing their differences – and should know by the end of today whether a deal can be done.
Investors, though, fear that the two sides won’t close the gap. The Democrats are still pushing for at least $2.2trn of additional spending to support families, businesses, and public-health agencies – the latest White House offer is $1.8trn.
Pelosi is also pushing for more support for those made unemployed in the pandemic, expanded tax credits for poorer families, and aid for states worst hit by Covid-19. That’s a lot for the White House to swallow…. but president Trump would like a deal, so that $1,200 cheques could be dispatched to Americans.
Anxiety about the talks hit shares on Wall Street last night, with the Dow Jones industrial average losing 410 points in a nervy late selloff.
Jim Reid of Deutsche Bank says anxiety about the talks has ‘soured’ the mood in the markets:
The two sides remain talking ahead of today’s deadline. While the Republican-led Senate has been reluctant to pass a stimulus bill above the $500 billion level that Majority leader McConnell has supported, President Trump has indicated that he is willing to go up to the $2.2 trillion range that Democrats have demanded. Mr Trump said yesterday that if an agreement with Democrats is reached, he would “lean” on Republican Senators to “come along.”
Regardless, the confirmation that the two sides remain significantly apart saw the S&P 500 fall over 1.1% in the last 90 minutes of trading, though the index had been dripping lower throughout the day as risk sentiment soured after a healthy start.
After falling yesterday, European stock markets are on track to open lower this morning.
Bank of England policymaker Gertjan Vlieghe is due to speak about the state of the UK economy this morning, and we also get a healthcheck on America’s housing market.
- 7am BST: German consumer confidence survey from GfK
- 10.30am BST: Bank of England MPC member Gertjan Vlieghe speech on “Assessing the Health of the Economy”
- 1.30pm BST: US housing start and building permit data for September