By Geoffrey Smith
Investing.com -- President Donald Trump revives hope for some support for the economy ahead of the election, initial jobless claims are set to stay stuck over 800,000, airline results cast fresh light on the industry's woes and Europe's Covid-19 problems just get worse. Here's what you need to know in financial markets on Thursday, October 8th.
1. Trump pivots on stimulus
President Donald Trump signalled a willingness to negotiate piecemeal bills to support the economy, having broken off talks with House Democrats about a comprehensive stimulus package a day earlier.
“If I am sent a Stand Alone Bill for Stimulus Checks ($1,200), they will go out to our great people IMMEDIATELY. I am ready to sign right now,” Trump tweeted on Wednesday night.
House Speaker Nancy Pelosi retorted that the President was only interested in sending out checks with his signature on it.
Trump’s pivot effectively strips out the hundreds of billions in aid that the Democrats wanted for state and municipal governments, which they say are needed to deal with the collapse in local tax revenues and the cost of keeping public buildings such as schools open and safe.
2. Jobless claims seen still stuck over 800,000
The number of people with a direct interest in a stimulus check is likely to remain elevated when this week’s jobless claims numbers are published at 8:30 AM ET (1230 GMT).
The claims numbers have lost their ability to shock, with no sustained negative reaction to six straight weeks of initial claims between 800,000 and 900,000. This week’s initial claims are expected to have edged down to 820,000, which would represent another post-pandemic low but still run at a level unimaginable before the crisis. Continuing claims are expected to have fallen to 11.4 million from 11.77 million.
The only other items of note on the data calendar are the NFIB Small Business Optimism survey and speeches from Federal Reserve officials Thomas Barkin at 2:25 PM ET and Robert Kaplan at 6 PM ET.
3. Stocks set to extend rebound on stimulus hope
U.S. stock markets are indicated to open higher, still supported by hopes of support for the U.S. economy after the administration’s abrupt pivot on Wednesday.
By 6:15 AM ET, Dow 30 futures were up 113 points, or 0.4%, while S&P 500 Futures were up by a similar amount. NASDAQ Futures were up by 0.6%.
Stocks likely to be in focus later include Walt Disney (NYSE:DIS), which was urged by activist investor Dan Loeb to cut its dividend and spend the money instead on new content for its streaming channel Disney+. Loeb argued that this would enable it to get a valuation more on a par with Netflix (NASDAQ:NFLX).
There will also be earnings updates from Domino’s Pizza and Helen of Troy.
4. Delta, EasyJet cast light on airlines plight
The most eagerly-awaited update will however come from Delta Air Lines (NYSE:DAL), which will be the first of the major airlines to report numbers for the three months through September.
Trump called on Congress again to help the airline business on Wednesday, against the backdrop of looming mass layoffs. Some 43 airlines have already failed this year, according to data from travel company Cirium. Pelosi has indicated she would consider a standalone bill although it’s not clear what strings she would attach to it.
In Europe earlier, EasyJet, the continent’s second-biggest airline at the start of the year, said it had made its first ever annual loss, of a cool billion dollars. It expects to fly at only 25% of capacity over the next three months.
5. Europe's Covid numbers spiral higher
The Covid-19 virus is threatening to spiral out of control again in Europe. Countries from France and Spain to the Czech Republic have all posted their biggest ever daily numbers of new infections, while German Health Minister Jens Spahn said he was “very concerned” the sharp rise in infections in the country to over 4,000 yesterday.
“It is possible that we will see more than 10,000 cases a day and that the virus will spread uncontrollably,” Lothar Wieler, head of Germany’s Robert Koch Institute, said earlier.
A U.K. minister meanwhile observed that the string of local lockdown measures announced in Britain in recent days weren’t having any visible success in flattening the infection curve.