The first presidential debate between incumbent Republican President Donald Trump and Democratic party Nominee Joe Biden is scheduled to take place on Tuesday, 29 September in Cleveland, Ohio. The first debate will be 90 minutes and focus on six topics: "The Trump and Biden Records," "The Supreme Court," "Covid-19," "The Economy," "Race and Violence in our Cities" and "The Integrity of the Election." It will be moderated by Fox News' Chris Wallace. If Trump is perceived to win the first debate, and his chances rise in prediction markets, there could be a positive move in risk markets. Trump is perceived as better for stocks and the economy, while Biden is expected to push for higher taxes and more regulation.
On Saturday, President Donald Trump announced his nomination of conservative Judge Amy Coney Barrett to replace liberal Justice Ruth Bader Ginsburg on the Supreme Court. Barrett’s addition would shift the ideological balance to the right, giving the conservatives a 6-3 majority. Republicans decision to vote on trump’s nominee so soon before the election has infuriated democrats. The average Supreme Court nomination process takes about 70 days, with election day just 37 days away. Prospects for Democrats and Republicans to agree on an additional round of stimulus seemed to diminish further over the weekend as President Trump vowed to have his nominated Supreme Court replacement confirmed before the election.
Economists expect the September employment report (to be released on Friday), the last before the election, to show a slower pace of job growth than in August. The consensus forecast is for 920,000 nonfarm payrolls, from 1.37 million in August, according to Refinitiv. The unemployment rate is expected to drop to 8.2% from 8.4%.
Shares in Europe were sharply down over the week as a surge in coronavirus infections and the prospects of the reintroduction of economically damaging restrictions scared investors. Prime Minister Boris Johnson decreed tighter social restrictions including that pubs, bars and restaurants must close by 10 p.m and advised people to work at home.
Global equities fell over the week with the S&P 500 briefly entering correction territory before recovering to end the week down (-0.62%), while the tech-heavy Nasdaq Composite Index proved to be more resilient gaining 1.12% for the week. The pan-European STOXX Europe 50 Index ended the week 4.5% lower and the UK’s FTSE 100 Index lost 2.74%. Stocks in China fell in tandem with global markets, with the benchmark Shanghai Composite Index dropping 3.5%.
Market Moves of the Week
The South African benchmark all share index ended the week down 1.99% with the rand reaching its worst level in over a month as a rise in global coronavirus cases weighed on investor sentiment.
An increase in the number of Covid-19 cases in South Africa was reported over the week, after the country entered Level 1 earlier in the week. South Africa’s current daily average stands at around 1600 cases a day, an increase of 6% over the last week. Further restrictions will be eased at the start of October when international travel will be permitted again.
During the week Reserve Bank Governor Lesetja Kganyago re-iterated that South Africa needs structural reforms to lift growth and that no amount of monetary policy can overcome structural impediments such as unreliable electricity supply. The Bank’s monetary policy committee announced at its recent meeting that it expects the economy to shrink 8.2% for 2020 and sees inflation averaging 3.3% in 2020 and staying below the 4.5% midpoint of its target range through 2022.
On the commodities and precious metals front gold was down to $1,864/oz over the week while Brent crude lost 2.92% to end at $41.83 a barrel.
Chart of the Week
Source: Real Clear Politics. The average of US presidential polls shows former Vice President Joe Biden’s lead over President Donald Trump up to 6.9% nationally.
Whilst volatility is likely to continue amid current market uncertainty over the coronavirus disease, our message to all investors remains the same – stay calm in making decisions that are aligned with your long-term goals, not current market conditions. In any market environment, we strongly believe that investors should stay properly diversified across a variety of asset classes and that clients financial plan supports their long-term goals, time horizon and tolerance for risk.
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