How to start the week: analytics and forecasts — 19.10.2020

Fundamental analysis and forecasts for the future

The market has not received new incentives, in contrast to the growth in the incidence of COVID-19.


Must know

A trade deal between the UK and the EU is unlikely to be struck. A hint was given by the Prime Minister of the Kingdom, Boris Johnson. He said the UK needs to prepare for a life without a trade agreement. It is possible that cooperation between London and Brussels will be based on international trade norms. The UK has implemented a similar scenario with Australia.

ECB President Christine Lagarde last week reaffirmed the central bank’s determination to use all available tools to stimulate the economy.

The second wave of COVID-19 hits the world, but EU countries and the UK are in a hurry to get ahead of the curve. However, Italy and Spain reported record increases in the number of cases. The risk of re-closure of countries is still in the air, but investors do not believe in this scenario.

Australia called on China to re-enter the negotiating table to discuss bilateral trade relations. Recall that China has stopped importing a number of Australian products: wine, coal, cotton, and others. Now Australia is trying to restore the situation amid a sharp economic slowdown.

Among the important economic reports released last week, it is worth highlighting a decrease in crude oil reserves, a worsening situation in the UK labor market, an increase in the number of applications for unemployment benefits, as well as an increase in retail sales in the United States.


A fundamental view


After OPEC Secretary-General Mohamed Barkindo promised that the oil market would no longer be affected by shocking collapses, the price of black gold has stabilized. This may be only the first signal of a bullish trend in oil, as the market awaits the introduction of new economic stimulus in the United States, as well as the victory over COVID-19.

Against this background, the demand for shares of oil companies such as Chevron may grow. In addition, the company’s quarterly report will be published on October 30th.


Financial holding UBS raised its target for Microsoft shares to $243 and further recommendation to buy this asset.


Investment Bank Goldman Sachs has shared its forecast for the US currency rate. According to the company’s analysts, in the event of a “blue wave” (Joe Biden’s victory), the weighted average USD rate will fall to the 2018 lows.


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