Equities fell last week amid rising COVID case numbers and the continuing stalemate in U.S. stimulus negotiations. The White House and House Democrats both accused each other of shifting expectations for the fiscal stimulus package, and a deal remains elusive with the U.S. elections just one week away. Whilst the implications of not passing a deal are far from certain, there had been a growing expectation that something would be agreed (as evidenced in higher U.S. bond yields).


U.S. housing data continued to benefit from the lower interest rate environment seen this year, with existing home sales growing 9.4% from a month earlier. The U.S. Composite PMI rose to 55.5 in October from 54.3 the month before, the highest level since February 2019. It was the service sector in particular that recorded a marked acceleration in activity, entering the fourth quarter on a solid footing. The Q3 earnings season is now well under way with roughly a quarter of the S&P 500 companies having reported. The beat/miss-ratio is above historical levels and the average earnings surprise currently stands at a solid 18%, though lower and less of a market driver than in Q2.


As we entered our own Level 5 restrictions here in Ireland, a number of other European countries have followed suit. France reported a record 52,000 new cases on Sunday and has extended night-time curfews. Germany and Italy have also reintroduced measures whilst the U.K. government is attempting to impose contentious regional lockdowns.


As the second wave of the virus takes hold, service sector confidence in the Eurozone is weakening. Whilst the manufacturing PMI data for September held up well, services confidence fell almost two points to 46.2 from 48.0, well below the 50-mark dividing contraction from expansion. CLICK HERE