Global stocks spike ahead of first Biden-Trump debate

Global stocks rose sharply today as traders reacted to upbeat industrial profit results from China and the possibility of a deal between the European Union and the UK. Yesterday, data from China showed that industrial profits declined by just 4.4%, the best performance since February this year.  In the UK, the FTSE 100 rose by almost 2% while in Germany, the DAX index rose by more than 2%. The pan-European Stoxx 40 index rose by more than 1.50%. Banks were the biggest winners led by HSBC, Barclays, and Credit Suisse. 

In the United States, futures tied to the Dow Jones, S&P 500, and Nasdaq 100 rose by more than 1% as investors waited for the first presidential debate between Donald Trump and Joe Biden. The debate will happen as the odds of a Biden victory remained reasonably high. His chances received a boost after a report by the New York Times showed that Donald Trump paid minimal taxes as his business empire remained deeply in the red. US equities are also rising after Trump nominated Judge Amy Coney Barrett to be the next Supreme Court justice. Investors believe that the court will now be supportive of companies with Republicans in control.

The US dollar declined against key peers as investors started to focus on the nonfarm payroll data from the United States. On Wednesday, ADP will release its reading of the private sector additions in September. Analysts polled by Reuters expect the data to show that private firms added more than 605k jobs in September. That will be higher than the 428K that they created in August. Meanwhile, on Friday, the Labour Department will release the nonfarm payroll data that are expected to show that the unemployment rate fell to 8.2%. Today, the dollar declined by 1.30% against sterling, 0.30% against the euro, and by 0.60% against the Swedish krona.

EUR/USD

The EUR/USD rose to an intraday high of 1.1660 as traders reacted to news that the UK and EU could reach a decision on Brexit. On the four-hour chart, the price is along the middle line of the Donchian channels and is slightly below the 25-day EMA. The pair is also attempting to retest the 38.2% Fibonacci retracement level. Therefore, a move above the 25-day EMA and the middle line of the Donchian channels will be a signal that bulls are in relative control. This could push it to the upper side of the channel at ~1.1700.

GBP/USD

The GBP/USD pair rose to an intraday high of 1.2900, which is an important psychological level. The price is also the highest it has been since September 21. On the four-hour chart, the price has moved above the 25-day and 50-day exponential moving averages. The price is above the 50% Fibonacci retracement level. The RSI has moved close to the overbought level of 70. Therefore, the price is likely to continue rising as bulls attempt to test the next level at 1.2950.

GER30

The DAX index is rising sharply today as investors reacted to the likelihood of a deal between the EU and the UK. The index is trading at €12,818, which is slightly above the 25-day and 50-day exponential moving averages. The price is above last week’s low of €12,342. It is also slightly above the middle line of the Donchian channels. Therefore, the price is likely to continue rising as bulls target the next level at €13,000.