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Weekly financial market overview 21.09.-27.09.

News - September 28, 2020



Konstantins Goluzins, CFA

Head of Asset Management
Phone.: (+371) 6700 0456
E-mail: trust@bib.eu


Main events of the previous week

After the death of 87-year-old Ruth Ginsburg on September 18, who was appointed to the US Supreme Court by the Democrat Bill Clinton in 1993, US President Donald Trump formally received the right to appoint a new judge, the action that Democrats sharply opposed. Since the presidential elections will be held in November this year - and Democrats are demanding that a new judge be appointed by the new president, be it Trump, but after the re-election or his Democrat opponent Joe Biden. Ginsburg herself expressed the same wish before her death. Despite the demands of the Democrats and the wishes of Ginsburg, US President Donald Trump nominated Amy Coney Barrett for the position of Supreme Court Justice. Barrett is a devout Catholic who, according to a 2013 article, believes that life begins at conception. She has seven children. Her candidacy has been supported by religious conservatives who hope to overturn a landmark 1973 Supreme Court decision that allowed abortion across the country. Barrett herself has repeatedly argued that her faith and views will not affect her work in any way. In 2016, she also stated that she did not count on the revocation of the 1973 decision. According to her, only the restrictions imposed, for example, on abortions in late pregnancy, as well as on the work of clinics, can change. Former fellow judges who have commented on the American media are also convinced that Barrett's views will not affect the quality of her work. Democratic presidential candidate Joe Biden has called on the Senate not to approve Barrett's candidacy until the November presidential election, saying it would be Trump's "abuse of power" otherwise. If Barrett is approved, conservative judges will be outnumbered 6 to 3 in the Supreme Court over Democratic-appointed judges. The Senate is expected to begin hearings on Barrett on October 12. The US Supreme Court is the highest court of law, with nine judges, all appointed by US presidents for life. The court can be an appellate instance - and its decision is no subject to appeal.

Economic data

US. The number of initial jobless claims for the week was registered in the amount of 870 thousand, which is 4 thousand more than the week before and 30 thousand more than analysts predicted.

Thanks to the low rates on the mortgages, home sales in the primary market in August grew by 4.8% compared to July and amounted to 1 million 11 thousand in annual terms, which is 130 thousand higher than predicted by analysts, as well as the highest reading since September 2006.

Home sales in the secondary market in August also showed an increase of 2.4% in comparison with the previous month; for the year, sales of 6 million units were in line with the forecast of surveyed analysts and reached the highest level since December 2006.

The volume of orders for durable goods in August increased by 0.4% versus the previous month. The growth of the base indicator, which does not include civil aviation, also amounted to 0.4% over the same period.

According to the results of the primary assessment of the PMI business activity index in September, the indicator decreased by 0.2 points and amounted to 54.4. Of the indicators that make up the index, business activity in the service sector was lower by 0.4 points, while the state of the manufacturing sector increased by 0.4 points.

Eurozone. According to the results of the primary assessment of the PMI business activity index in September, the indicator decreased by 1.8 points and amounted to 50.1. Of the indicators that make up the index, business activity in the service sector was 2.9 points lower, and the state of the manufacturing sector increased by 2 points.

Key events this week

  • On Wednesday, China will publish data on business activity in the industrial sector, while the US will give the final estimate of GDP for the second quarter, and will also report on changes in oil reserves for the week.
  • On Thursday, the Eurozone will know the unemployment rate in August, and the US will report on personal income and expenses of Americans, and will also publish data on the number of initial jobless claims for the week.
  • On Friday, the Eurozone will give a primary estimate of the inflation rate in September, while the US will publish data on the state of the labor market in September.

The information provided herewith has an informative nature. This information cannot be regarded as an offer or recommendation for purchase, storage or sale of securities, or as an investment recommendation, an investment survey or a consultation on investments, or a recommendation to entrust management of your assets to the specific investment manager. The Client is fully aware and undertakes all risks involved in the investment. This information is prepared by AS Baltic International Bank.

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