With investors standing on the precipice of another earnings season, staring into the unknown, it’s hardy surprising markets have felt nervous today. After initial weakness, driven by disappointing UK labour market data, a pause in the J&J Covid vaccine trial and not helped by ambiguous Brexit headlines,  we did seen Europe stage somewhat of a recovery, driven primarily by reversion in growth names. Asia earlier had been marginally better primarily thanks to reports that Chinese imports in September rose from -2.1% YoY in August to +13.2% YoY in September. Unfortunately, as I write this things do feel like they are rolling over, with volumes picking up on this down turn. Telecoms have bucked the sour mood though, up again today. Our Spec Sales Mandeep Singh scopes out his tactical buy case for Deutsche Telecom. Sticking with the space, we’ve also put out a short note on Talk Talk, in which Nick Delfas argues that potential high amounts of cash burn would scare off any bidders. Mind your eye there.

Awkward timing or diverging strategies?

As the WHO reverses engines on their previous guidance around lockdowns, the UK today is set for further localised implementations to stem the exponential rise of the virus. The North is set to bear the brunt of most of the new lockdown restrictions, with Liverpool set to be placed in the strictest of the new three-tiered classification system.

All to play for today as European indices get back towards their 50dma. We have been stuck below for a while now so it would be nice to see them closing above ahead of the weekend. Quick summary, IBEX was above its 50dma yesterday but back testing it today (go España go!). FTSE MIB tested 19599 throughout the morning but is now trading well above it (19676 last). The UK is above though (despite a weaker MoM GDP print, 2.1% vs est. 4.6%) – FTSE 100 back above not only 5990 (50 dma) but also its long standing support of 6000. Lots of encouraging moves across the pond too. S&P Advance Decline line made a new all-time high yesterday (evidencing that the market breath is indeed good) and the Russell 2000 finally cleared the 1600 level – next target 5% higher.

We are at a slightly awkward time where earnings season is about to kick off but plenty of uncertainties are still around (US stimulus, Brexit, virus, economy). Feels like investors are in a bit of a mixed mood and are just going with the flow

More shock and less awe today as Trump’s tweet continues to reverberate. Despite his claim that there will be no further moves on the stimulus debate the fact that European indices are broadly unchanged suggests a degree of scepticism. What is clear though is that the mean reversion theme of yesterday has been put on ice for now. Volumes dead across the board with not a single country showing signs of life – how could you have conviction in these sort of markets?

What a disappointment – I’ve never seen such a woeful debate…not even at high school when we were practising to be future politicians. CBS polls show that Biden won the debate but overall I’m not sure anyone came out of it well. Next debate will be on the 15th of October but for now Trump has other matters to worry about.  A bit of Tit for Tat from China this morning they are reportedly preparing to launch an antitrust probe into Google. All eyes back on Big Tech again today then?

The day has arrived! Trump and Biden are set up to have a pretty stressful day ahead of the first presidential debate this evening (2:00 am BST). They will discuss 6 key topics – the records of both, the supreme court, Covid-19, the economy, race/violence across the country and the integrity of the election – so it will definitely be a ‘hot’ one. I am sure Trumps taxes will be brought up at some point!

We’ve had a banks led sell off today with the SX7P breaking thought the 80/ 78.93 levels. The next level we are  watching is March’s low of 78.93 and after that the next level would be the low from 1987 (76.81) – crazy isn’t it? I wasn’t even alive then. VGA obviously followed the trend and slipped through 3127 – our worry was them trading below 3117 and boom, 3112 last. Next level to watch it 3054 on the SX5E but 3000 area also quite likely. Relevant to point out that vols picked up on the down move (theme of high vols on down days remains). Across the pond, the KBW Bank Index will be in the spotlight this afternoon. Main level is 70 but if it breaks, it will then target 60!

Very much a day of waiting to see what happens in the US as we get close to some very key levels on both side of the pond. So far today we’ve seen banks recover from the early dip to hold the 80 level on the SX7P. The FTSE has held 5778 and is now stuck between 5778 and 6000 (5840 last) and Eurostoxx futures held the end July lows of 3127 (3147 last). So far so good but the DXY continues above 94 and that sees Gold below the August lows of 1863 (1855 last).

Another day in the green but “little conviction to the move” remains the overriding theme. Volumes are pretty low across the board with EU indices trading -28% below their 5d AVATs. We have been better to sell since the open and disappointingly, looks like the real volumes only come when we have down days. We will be watching the SPX later today – a move above its 50dma would certainly be encouraging.