Trump vows to curb economic ties with China, fears of a coronavirus resurgence become reality, and stimulus stalemate continues in Washington.
President Donald Trump said he is going to “end” U.S. reliance on China and threatened to punish any American company that creates jobs overseas. In his speech at the White House, during which he also leveled charges against his opponent Joe Biden, Trump suggested that he was open up to a complete decoupling of the world’s two largest economies. While there were no concrete measures announced, and trade relations between the countries remain stable for now, the administration is said to be considering a ban on imports from China containing cotton from the Xinjiang region in response to Beijing’s alleged repression of the Uighur Muslim minority group.
Fears of a second wave of coronavirus infections are becoming reality in Europe where France has seen a new peak in cases, with rates rising in Germany and the U.K. The major difference this time is that the bulk of the infections are among people aged between 15 and 44 years, meaning the death rate has so far been much lower as the elderly and vulnerable remain more disciplined about sticking to guidance on social distancing. Cases in the U.S. remain below their recent peaks, and a new experimental Covid-19 vaccine originating from the University of Oxford has begun human trials in Australia.
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Back to the office
The Senate returns to Washington today with lawmakers and the Trump administration no closer to agreement on a package of fiscal measures. Democrats are not budging from their proposal for a $2.2 trillion relief package as Senate Majority Leader Mitch McConnell backs the White House-supported $500 billion stimulus plan. In other back-to-the-office news, Wall Street wants more employees to return to normal work arrangements, with JPMorgan Chase & Co. among the banks pushing for increased office attendance from this week.
A bounce in European stocks during yesterday’s U.S. holiday is not surviving the return of American traders, with equities posting a mixed performance this morning. The MSCI Asia Pacific Index was 0.3% higher overnight, while Japan’s Topix index closed 0.7% higher. In Europe, the Stoxx 600 Index reversed early-session gains to trade 1% lower by 5:50 a.m. Eastern Time. S&P 500 futures pointed to drop at the open, with tech shares again driving the losses, the 10-year Treasury yield was at 0.689% and gold fell.
There is little of note on today’s economic calendar, aside from July consumer credit numbers at 3:00 p.m. In London the latest round of Brexit negotiations begin, with investors becoming nervous again about the chances of a no-deal outcome. President Trump speaks in Florida and North Carolina later and Secretary of State Mike Pompeo is at the Atlantic Council. Lululemon Athletica Inc. and Slack Technologies Inc. report results.