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BOV Market Watch - Week ending 30th October 2020
30 Oct 2020
US GDP shows substantial rebound in the third quarter. Coming off the worst quarter in history, the US economy grew at its fastest pace ever in the third quarter as a nation battered by an unprecedented pandemic started to put itself back together. The Commerce Department said on Thursday that real gross domestic product (GDP) skyrocketed by 33.1 percent in the third quarter after plunging by 31.4 percent in the second quarter. Economists had expected GDP to soar by 31.0 percent. Many statistics go into measuring the scale of an economic rebound, and figures seen earlier in the week showed another mixed bag of data. Durable goods orders and home price growth exceeded expectations, while new home sales and consumer confidence numbers came short of expectations. While the news on third quarter GDP was good, the US faces a tougher road ahead as coronavirus cases increase and worries grow over the economic impact of the surge.

ECB holds off on strengthening stimulus. In its monetary policy meeting on Thursday, the European Central Bank held off from increasing its current economic stimulus but signalled that more could be coming at its December meeting given that risks are “clearly tilted to the downside”. The decision comes amid growing concern that a renewed surge in Covid-19 cases in Europe could stall the recovery from a deep downturn early this year. Meanwhile, the central bank made no change to its 1.35 trillion pandemic emergency bond purchase programme, which pumps newly created money into the economy to keep credit flowing to businesses and promote economic activity. Those regular purchases are set to run through the middle of next year. Analysts believe that is one reason the bank is standing pat, since there is plenty of stimulus still in the pipeline.

German consumer prices fell in October on year-on- year.
Preliminary data published by German statistics office Destatis on Thursday shows that German consumer prices fell in October. Year-on-year, consumer prices fell by 0.2 percent measured by national standards, less than the 0.3 percent drop expected by economists. Consumer prices declined by 0.5 percent on EU-harmonized standards year-on-year, in line with forecasts. The inflation rate has been influenced by the value added tax reduction effective at the beginning of July, the report said. Consumer prices increased by 0.1 percent on month by national standards and remained flat the EU-harmonized basis. Economists had forecast that prices would remain flat on both national standards and EU-harmonized standards on month.

UK mortgage approvals at 13-year high.
Mortgage approvals in the UK have surged to their highest levels since 2007 unexpectedly extending a post-lockdown surge, but there was a record drop in unsecured lending to consumers, Bank of England data showed on Thursday. Mortgage approvals for house purchase jumped to 91,454 in September from August’s already-high reading of 85,530, exceeding forecasts that had instead pointed to a decline. Activity in Britain’s housing market has rebounded sharply since the end of lockdown restrictions and was further fuelled when the government temporarily suspended property purchase taxes in July. Earlier in October, mortgage lender Halifax reported a 7.3 percent annual rise in house prices for September, the biggest increase since 2016.
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Bank of Valletta p.l.c. is a public limited company regulated by the MFSA and is licensed to carry out the business of banking and investment services in terms of the Banking Act (Cap. 371 of the Laws of Malta) and the Investment Services Act (Cap.370. of the Laws of Malta).