Refinitiv Newscasts - UK Day Ahead: U.S. election result, nonfarm, Fed, BoE, Furlough extension

Baader Bank AG

05/11/2020 15:31

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Source: Reuters Insider

Description: European stocks enters its fifth day of gains as investors wait
on the result of the U.S. elections. Brace for market reaction to the Fed news
conference late on Thursday, after the Bank of England unleased more stimulus
for the economy. Plus, British Finance Minister Rishi Sunak extends the
furlough scheme to the end of March 2021.
Short Link: https://refini.tv/3l4ppqO

Video Transcript:

Good afternoon. I'm Angeline Ong, and welcome to your wrap up of the day's top
news and an insight into what's coming up Friday. But first, European stocks
entering its fifth day of gains, boosted by strong earnings and also more
stimulus for Britain's economy. These moves also coming as Democrat Joe Biden
moved closer to a victory in the US presidential race. Baader Bank's head of
Capital Markets Analysis, Robert Halver, explains why markets are reacting
this way. 

German stock markets are happy, as happy as children at Christmas, because we
are in the optimal scenario. If Biden becomes president, there will be fewer
trade wars or no trade wars at all. There would be more calm in the
geopolitical realm. 

Then there's the stimulus factor- the Bank of England ramped up its bond
buying by more than expected. 

If you put together what we've experience in our forecast, it looks like the
economy will end up 10% or 11% below the level of activity we had at the end
of last year. Now, that is historically unprecedented pretty much. I can't
give you exact figures for the last 300 years, but it's a huge impact. I mean,
there's nothing, certainly in modern times, that we can point to which would
be like that. 

And in a coordinated move, British Finance Minister Rishi Sunak also boosted
his GBP200 billion economic rescue program once again. This time extending the
government's costly coronavirus furlough scheme, which provides 80% of the pay
of temporarily laid off workers until the end of March. 

So, we can announce today that the furlough scheme will not be extended for
one month. It will be extended until the end of March. The government will
continue to help pay people's wages up to 80% of the normal amount. All
employers will have to pay for hours not worked as the cost of employer NICs
and pension contributions. 

Now, of course, the focus on the economy shifts over to the United States with
the key jobs report out tomorrow and if it's not obscured by the ongoing US
election race. US employment growth likely to have slowed again in October.
Just over half of the 22.2 million jobs lost during the pandemic have been
recouped so far. The Fed also holds a news conference later Thursday after its
policy decision, but it seen lying low while the US election results remain
murky. And that's it for now. I'm Angeline Ong, and this is Reuters