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FTSE 100, DAX and Dow Jones set to slide, fears of new market slump

Global equities suffered significant losses this week, with the FTSE 100, DAX and Dow Jones all sliding into negative territory, with some investors fearing financial markets are on the cusp of a second Covid-19 driven slump.

  • Global equities suffer losses as fears of a second Covid-19 driven slump mount
  • Dow Jones down more than 600 points on Friday
  • WHO warns that vaccinations won’t be ready until mid-2021

Global equities suffered significant losses this week, with the FTSE 100, DAX and Dow Jones all sliding into negative territory, with some investors fearing financial markets are on the cusp of a second Covid-19 driven slump.

Major indexes around the world did initially showed signs of stabilising in early morning trading on Friday, after enduring sharp declines on Thursday’s session.

But global equities eventually gave way, with the FTSE 100 ending the week 211 points lower (-3.5%), while the German DAX fell by 294 points (-2.2%).

The Dow Jones is suffering the worst of all, however, with it down more than 1400 points over the last two trading sessions and capable of falling even further before the Friday’s close.

Investors have grown increasingly concerned about the health of the US economy and its ability to recover from the impact of the coronavirus, after US jobs data disappointed this week, with the Dow Jones witnessing its worst sell-off since June as a result.

The Dow Jones is trading at 27,828 points at the time of publication, with the index down 3% year-to-date.

Long-term outlook remains promising, says IG analysts

The Covid-19 crisis is likely to pass eventually, with central banks and governments continuing to provide supportive policies, according to Chris Beauchamp, chief market analyst at IG.

‘Consumer spending will recover,’ he said. ‘Even the US election will eventually fade into the background.’

‘The market weathered the initial storm of Covid-19, eventually,’ Beauchamp added. ‘It seems like further gains into 2021 and beyond are likely, but after the easy summer of 2020 for equities, a tougher Autumn may lie ahead.’

WHO says Covid-19 vaccinations not ready until mid-2021

Optimism is high due to the number of vaccinations going to trial, but the World Health Organisation (WHO) said that many will not be widespread until at least the middle of next year, with many checks required to test the effectiveness and viability of these vaccines.

‘We are really not expecting to see widespread vaccination until the middle of next year,’ WHO spokeswoman Margaret Harris said at a UN briefing in Geneva.

‘This phase 3 must take longer because we need to see how truly protective the vaccine is and we also need to see how safe it is,’ she added.

Race to find vaccine heats up

The race to find a vaccine is heating up, with AstraZeneca announcing earlier this week that it is holding advanced clinical trials for its own vaccine which it is developing in partnership with Oxford University.

The British-Swedish pharmaceutical company also said that it had struck a deal wit Oxford Biomedica to reserve production lines at the company’s new manufacturing plant, after the UK government placing an order to 100 million doses of AstraZeneca’s vaccine.

Meanwhile, GlaxoSmithKline and Sanofi said that they expect to finalise their first set of results from the trial in early December, with the intention of starting a Phase 3 trial later that month.

‘The initiation of our clinical study is an important step and brings us closer to a potential vaccine which could help defeat Covid-19,’ Thomas Triomphe, executive vice president and global head of Sanofi Pasteur, said.

‘Our dedicated teams and partner continue to work around the clock as we aim to deliver first results in early December. Positive data will enable a prompt start of the pivotal phase 3 trial by the end of this year,’ he added.

As the moment there are approximately 160 vaccines being trialled around the world by companies, including Moderna, as well as a partnership between Pfizer and BioNTech.

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Daily Financial News

Czech Aug Industrial Production Rebounds Sharply

Czech industrial production surged in August, after falling sharply in the previous month, figures from the Czech Statistical Office showed Friday.

Industrial production expanded 13.1 percent year-over-year in August, reversing a 14.1 percent plunge in July. That was well above the 8.3 percent climb expected by economists.

On a working-day-adjusted basis, industrial production advanced 7.7 percent in August from a year ago.

Manufacturing production grew 16.6 percent, while mining and quarrying output declined by 4.6 percent.

Month-on-month, industrial production increased a seasonally adjusted 12.1 percent in August.

Separately, the statistical office revealed that construction output decreased 5.9 percent yearly in August, following a 16.3 percent slump in the prior month. Compared to July, construction output gained 0.8 percent

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Daily Financial News

New Zealand’s first Fairtrade Climate Neutral Coffee

Fairtrade have launched New Zealand’s first climate neutral coffee, which not only helps fight climate change, but also supports communities in developing countries. In partnership with Countdown, the Climate Neutral Coffee is exclusively available at Countdown as part of their Macro brand.

Fairtrade Climate Neutral Coffee means that the coffee production, from the farm right through to the supermarket shelf, has no negative impact on the climate. To achieve this, all participants in the supply chain first work to reduce their emissions and then offset the remaining emissions through the purchase of carbon credits from Fairtrade coffee farmers.

The carbon credits are generated by climate projects in Fairtrade farming communities, such as reforestation projects in Peru, the country where the coffee originates. These initiatives help Fairtrade farmers not only to combat the impact of climate change but also to earn additional income from the sale of their carbon credits.

Countdown partnered with Fairtrade Australia & New Zealand to develop the Climate Neutral Coffee exclusively for their Macro Organic range. The innovative product maintains Countdowns commitment to providing great quality products, while also helping to minimise their impacts on the environment.

James Walker, Countdown General Manager of Corporate Affairs says, “We’re pleased to extend our range of Fairtrade certified products, and be the first to launch a Climate Neutral Coffee in New Zealand.

“Demand for certified products continues to increase and this launch showcases our commitment to providing ethical and sustainable choices to our customers. The range is not only quality Arabica coffee, but it is also organic, Fairtrade certified and Climate Neutral.”

“With stores all around New Zealand, doing our bit to reduce our carbon footprint and operate sustainably is something the Countdown team is passionate about. In June this year we won the Ministry for the Environment’s Green Ribbon award in the ‘Resilience to Climate Change’ category for our work in increasing our energy efficiency and reducing our carbon emissions. We are actively working to improve how we do business to reduce the impact we have on the environment.

Molly Harriss Olson, CEO of Fairtrade New Zealand says, “We applaud Countdown for being a market leader in sustainability and are proud to partner with them on this innovative range. By choosing Fairtrade products, consumers are supporting a global system which is empowering and enabling 1.65 million farmers in 74 countries to adapt to climate change,” says Mr Walker.

“What makes Macro Fairtrade Climate Neutral Coffee truly unique is that the carbon compensation also takes place in the Fairtrade coffee supply chain. This means that Fairtrade farmers and their communities are benefitting from a fair price for their coffee as well as additional income from the carbon credits.”

All Fairtrade Carbon Credits are certified by Gold Standard, an organisation specialising in climate security and sustainable development. Gold Standard works to maximise the impact of climate and development interventions by creating robust standards for responsible management of the planet’s resources. Together Fairtrade and Gold Standard are uniquely placed to play a part in the global response to climate change

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Financial News

USD/JPY eases from highs, back to 103.80 ahead of NFP

After reaching fresh highs above the 104.00 handle on Thursday, USD/JPY has now slipped back to the 103.85/80 band.

USD/JPY attention to Payrolls

Despite the current slide, spot keeps its rally intact at the end of the week, advancing for the second consecutive week and up around 4 cents since recent lows in the 100.00 neighbourhood seen in early September.

Along with the continuation of the selling bias around the Japanese safe haven, the greenback has been gathering extra pace backed by positive results in the US calendar and rising speculations on a Fed’s rate hike at the December meeting.

Ahead in the session, US Non-farm Payrolls are expected to show the economy has added more than 170K jobs during September, while the unemployment rate is seen at 4.9%. In addition, FOMC’s S.Fischer, L.Mester and E.George are due to speak in Washington, keeping the focus on the buck.

USD/JPY levels to consider

As of writing the pair is losing 0.13% at 103.80 and a breakdown of 101.99 (55-day sma) would aim for 101.83 (20-day sma) and finally 100.07 (low Sep.22). On the other hand, the next up barrier aligns at 104.33 (high Sep.2) ahead of 107.48 (high Jul.21) and finally 108.30 (200-day sma).

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