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Trump's Back, Stimulus Talk and Stocks Drift Lower: What's up in Markets

Published 06/10/2020, 11:27
Updated 06/10/2020, 11:31
© Reuters

By Geoffrey Smith 

Investing.com -- Donald Trump returns to the White House, talk on fiscal stimulus progresses, and central bankers line up to promise more. Stocks are drifting lower but oil is well supported ahead of weekly stockpile data. Here's what you need to know in financial markets on Tuesday, October 6th.

1. Trump back at the White House 

U.S. President Donald Trump left hospital to return to the White House late on Monday, less than a week after being diagnosed with the Covid-19 virus.

In a brief video clip Trump urged his fellow Americans not to be afraid of the virus and not to let it “dominate” their lives, pointing to the quality of U.S. healthcare and vaccines that he said would be “arriving momentarily”.

Trump is under pressure to return to the campaign trail (and the fund-raising trail) as soon as possible, given that he trails Democratic nominee Joe Biden nationally by as much as 14 points.

Some 210,000 Americans have died from the virus so far, with a clear – if still relatively gentle – upward trend in hospitalizations over the last two weeks as the onset of autumn works in the virus’ favor.

2. Stimulus talks progress; Powell, Lagarde speeches due

Talks on a fresh round of fiscal support for the U.S. economy appear to be making progress toward completion.

House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin spoke by telephone for an hour on Monday in an effort to narrow their remaining differences. The talks are set to continue on Tuesday, according to various reports.

Hints of fresh stimulus to support the recovery also came from European Central Bank President Christine Lagarde, who told The Wall Street Journal that the economy is looking a little shakier, and stressed that the ECB still had room to cut its interest rates further below zero.

Lagarde is due to speak at a conference later, along with her chief economist Philip Lane. Federal Reserve Chairman Jerome Powell will also address the same conference, while there are addresses elsewhere from Philadelphia Fed President Patrick Harker and the Dallas Fed’s Robert Kaplan.

3. Stocks set to drift lower

U.S. stock markets are set to open moderately lower after making strong gains on Monday in expectation of a fiscal stimulus package.

By 6:15 AM ET (1015 GMT), Dow 30 futures were down 29 points, or 0.1%, while S&P 500 futures were down 0.3% and Nasdaq futures were down 0.5%. The Nasdaq had made much the biggest gains of all three major indexes on Monday.

Stocks in focus later may include Sonos (NASDAQ:SONO), after reports that Apple (NASDAQ:AAPL) is dropping the wireless speaker maker’s products from its stores. That comes against a backdrop of heightened antitrust scrutiny of the way Apple and other major internet platform companies increasingly act as gatekeepers to the real economy for all other companies.

A light earnings schedule is headed by Levi Strauss (NYSE:LEVI).

4. Johnson peps renewable stocks

European renewable energy stocks hit fresh highs after Prime Minister Boris Johnson announced extra funding to guarantee the rollout of offshore wind power in the U.K.

The U.K. is Europe’s largest offshore wind market, and now intends to have 40 Gigawatts of capacity installed offshore by 2030 – enough, theoretically, to power every home in the country.

Johnson’s speech included pledges of more money to help U.K. ports and infrastructure adjust to the Energy Transition. However, it offered nothing to grid operator National Grid (LON:NG), whose job of managing power transmission will be made more difficult by accommodating so much variable generation capacity.

Wind farm operators Orsted (OTC:DOGEF) and Encavis stock hit a new all-time high, as did turbine maker Vestas. National Grid stock fell 1.2%.

5. Oil up ahead of API data, STEO

The American Petroleum Institute will release its weekly assessment of U.S. oil inventories at 4:30 PM ET (2030 GMT). Last week’s numbers showed unexpectedly strong demand with a net draw of 831,000 barrels.

That news will come four hours after the U.S. government releases its regular Short-Term Energy Outlook.

Crude futures have risen modestly overnight on optimism about the outlook for U.S. stimulus: U.S. futures were up 1.1% at $39.62 a barrel, while Brent futures were up 1.1% at $41.72 a barrel.

The pressure on the oil and gas industry remains intense, however. Elsewhere, a top Royal Dutch Shell (LON:RDSa) executive said the company intends to scale down to having fewer than 10 refineries worldwide. The comments come against a backdrop of low refining margins and an uncertain demand outlook for products such as jet fuel.

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