WTI crude oil lost another 1.1 percent on Friday to $35.79 on the Nymex amid concerns about global demand, taking its loss to 11 percent in October and more than 40 percent since the start of 2020. On the Comex, the ounce of gold gained 0.6% to $1,879.90, while the dollar index held firm (-0.07%) against the basket of currencies, and the euro decreased by 0.24% to $1,1646, in anticipation of the ECB’s additional support steps before the end of the year.
Uncertainty about the results of Tuesday’s US election
Market nervousness is reflected by the high level of the CBOE Volatility Index (the VIX), also known as the “fear indicator,” which remains close to its mid-April highs of around 40, with only 1 day to go before Tuesday’s US presidential election.
Democratic nominee Joe Biden remains at the top of the polls for Tuesday’s presidential election, but investors note that in 2016, the same polls gave Hillary Clinton the favorite over Donald Trump, who eventually won. Such a situation would be detrimental to financial markets in a time of instability and could contribute to social tensions in the world. But the markets fear is too close to be cleared on election night, Tuesday, November 3.
The U.S. economy is still strong this fall
Nevertheless, the new macroeconomic indicators released in the United States suggest that economic recovery is continuing across the Atlantic. In September, household incomes and spending were higher than expected: personal incomes jumped by 0.9 percent compared to August, compared to a 0.4 percent consensus, and after a 2.5 percent decrease in August. On the other hand, personal spending increased by 1.4 percent, compared with a 1 percent consensus. In line with forecasts, the ‘central PCE’ adjusted price index rose 0.2 percent. It posted a rise of 1.5 percent year-on-year versus 1.7 percent consensus.
Chicago’s production PMI, meanwhile, came out better than anticipated at 61.1 in October, compared to a consensus of 58, but slowed from September’s 62.4.
Finally, as calculated by the University of Michigan, the final consumer confidence index was revised up to 81.8 in October from 81.2 in the first estimate and 81.2 in the local consensus, respectively. The index was at 80.4 in September. The current conditions index fell from 87.8 to 85.9, but the index rose from 75.6 to 79.2, signaling market optimism.
The epidemic is threatening to return Europe to recession in Q4
At this time, the resurgence of the coronavirus epidemic does not seem to affect the U.S. economy, but things could change if the situation worsens as quickly as it did in Europe, where several nations, including Germany and France, the two heavyweights of the region, had to partially close some of their economies this week to curb the spread of the virus. However, in the third quarter, the European region’s GDP rebounded significantly with an increase of 12.7% from the first quarter, but analysts are predicting a fall in negative territory in the fourth quarter as a result of curfews and partial lockdowns in the region.
The number of new coronavirus infections in the United States continues to grow, surpassing 80,000 a day, compared to less than 50,000 a month earlier. Cases are on the rise in 47 of the 50 states, and hospital systems are under strain again in some Midwestern states, in particular, as they did last spring. For now, the mortality curve has not skidded upward, but for many months, the nation has continued to report a large number of deaths, ranging from 500 to 1,200 a day. In particular, Covid-19 caused more than 229,000 deaths in the United States and more than 8.9 million people were officially infected.