Notes from the Trading Desk – Franklin Templeton

Franklin Templeton’s Notes from the Trading Desk offers a weekly overview of what their professional traders and analysts are watching in the markets. The European desk is manned by eight professionals based in Edinburgh, Scotland, with an average of 15 years of experience whose job it is to monitor the markets around the world. Their views are theirs alone and are not intended to be construed as investment advice.

The Digest

Global equities traded broadly higher last week despite a mixed US election result. The MSCI Global Index up 7.7% on the week, the S&P Index was up 7.3%, the Stoxx Europe 600 was up 7% and the MSCI Asia Pacific Index was up 6.3%.

Joe Biden’s US presidential election victory was confirmed over the weekend, yet the likelihood that Congress will be split—with Republicans in control of the Senate—has buoyed markets. This would reduce the chances increased corporate taxes and regulations on technology would pass. It should also mean that we are not too far away from some sort of fiscal stimulus package. It is worth noting that in each US election year for the last 70 years, November has been the best month for stock market performance. Meanwhile, the VIX index was down 34% on the week, suggesting uncertainty has eased.

US Election in View

Whilst a “blue wave” is still technically possible, the base case is now for a split Congress and a Republican Senate alongside a Joe Biden presidency. What does this mean for equities? Blue-wave infrastructure spending hopes may have faded a bit (which would have boosted value/cyclicals/small caps, building/construction, etc.), but stimulus certainly will come in some form from the United States (as well as Europe) and arguably, some of it has to be in these areas in order to boost the real economy.

A Biden presidency is also more favourable to these areas than a second term for Donald Trump would have been, but there is potential downside risk on moving too early and being disappointed by the eventual package if the fiscal proportion disappoints. The split Congress will likely limit any extreme skews to the distribution of stimulus, but speedy implementation would overall be positive for global equities. Less focus on fiscal spending means continued monetary easing likely, and we would expect the momentum trade to receive a boost.

A split Congress could be supportive for technology stocks, as it limits the Democrats’ ability to increase regulation. Tech is likely to resume its market leadership globally, which in turn is likely to set back the Europe/value trade. Even with a Biden win, any real change for health care/drug prices is now unlikely, given the probable split in Congress. The health care sector was one of the outperformers in global equity markets last week.

Thinking specifically on how the election result impacts equities in Europe, US defence spending is extremely important for UK and European stocks. We can arguably expect less under Biden than current president Trump, but the split Congress could be helpful here again, and geopolitical tensions remain. This means it is unlikely that spending would decline significantly, and it is already at very elevated levels.

Trade/China-exposed stocks could also do better on hopes that tensions between the United States and China are significantly reduced under a Biden presidency. Trump’s departure from the White House will be seen as a positive for China, with Trump’s successor expected to be far less combative in his approach to trade relations.

The lack of a blue wave is short-term negative for the green-deal trades, but we would guess this is short lived given the longer-term trajectory of the green trade. The structural inflows here are likely to continue, particularly in Europe where fiscal stimulus is tied into green industry—suggesting that any weakness in Environmental, Social, and Governance (ESG)/renewables is a potential buying opportunity.

Looking ahead, there is an interesting dynamic for European political relationships. Trump has a much better relationship with UK Prime Minister Boris Johnson than Biden has had in the past. In addition, the Irish Democratic caucus would likely push Biden to support a hard line on Brexit talks re Ireland, etc. However, from a European Union (EU) perspective, you would imagine German Chancellor Angela Merkel, French President Emmanuel Macron, et al. to have breathed a sigh of relief over the weekend on the news of Biden’s victory, as the trade narrative most likely becomes less confrontational.

Europe’s COVID-19 Resurgence

COVID-19 cases and deaths continue to rise across Europe, prompting fresh lockdown measures and an EU growth downgrade. France posted a record number of new virus cases on Friday (58,046) as the health minister warned of a “violent” second wave sweeping the country. Virus patients now account for more than 85% of French hospitals’ initial intensive-care capacity. Daily deaths in Europe continue to climb higher and new cases in the region now far exceed the United States.

With that, the EU slashed its 2021 gross domestic product (GDP) growth forecast from 6.1% to 4.1%, stating the pandemic could leave “deeper scars” than anticipated, “primarily from higher numbers of corporate bankruptcies and hysteresis effects on labour markets”.In addition, the EU stated that “Europe’s rebound has been interrupted due to the resurgence in COVID-19 cases. In the current context of very high uncertainty, national economic and fiscal policies must remain supportive”.

It also warned that member states could follow “rather different growth trajectories” depending on the structure of their economies. Spain’s economy is forecast to contract by more than 12% this year, the biggest hit in the currency bloc and more than previously anticipated. That compares with a euro-area average of -7.8%.

Week in Review


European equities were higher across the board last week, with the STOXX Europe Index closing the week up 7%. In terms of the major indices, the Italian FTSE MIB  outperformed, up 9.7% on the week. The UK FTSE 100 underperformed on the week, but still closed up 6.0%, with some of the heavier-weighted constituents lagging the broader market.

The UK exporters weren’t helped by the stronger British Pound (GBP), which was up 1.6% on the week vs. the US dollar (USD). Momentum stocks traded better in Europe, with the Momentum Index up 1.4%, whilst the Value Index was down 0.9% on the week. Sector moves throughout the week have been driven by the implications around the US election result, as noted.

With regards to Brexit negotiations, big differences remain in relation to the “level playing field” and the fisheries, according to press statements from Johnson and European Commission President Ursula von der Leyen. With the new US president-elect, the UK government will be very keen to resolve any Brexit-related issues regarding the Irish border, as we would expect this to be a sticking point for Biden. Nonetheless, it is likely that a trade deal with the United Kingdom may not be an immediate priority for the new US administration. Negotiations between the United Kingdom and the EU continue this week.

Meanwhile, the Bank of England (BoE) kept deposit rates unchanged at 10 basis points, and UK Chancellor Rishi Sunak extended the government’s job-retention scheme until the end of March 2021.

United States

As discussed, major indices made impressive gains last week in the wake of the US election. The S&P 500 Index closed up 7.3%, whilst the NASDAQ Index outperformed, up 9.4% on the week. The election noise largely overshadowed other news, but the Federal Open Market Committee (FOMC)  meeting took place on Thursday.

As expected, the Federal Reserve (Fed) kept interest rates on hold. The Fed did strike a dovish tone, signalling it is prepped and ready to act. Fed Chair Jerome Powell noted that the Committee members had a discussion about ways to increase monetary stimulus by changing the parameters of the balance-sheet policy, but that amendments were not yet necessary. The likelihood of some manner of tweaking at the December meeting is on the rise.

The monthly employment report on released on 06 November didn’t muster the attention it usually does given the obvious distractions, but nonfarm payrolls came in at +638,000 for the month of October, ahead of estimates. The unemployment rate was better than anticipated as well, coming in at 6.9%.

Global manufacturing data was also strong, with the US ISM Manufacturing Index improving sequentially and beating estimates, helped by a sharp upturn for new orders.

We are well on our way through the US earnings season now, with 90% of the S&P 500 companies having reported;  85% of those companies have beat earnings-per-share (EPS) estimates.


As with other regions, last week saw a strong performance for Asian equity markets, with the MSCI Asia Pacific Index up 6.3%. Hopes of a clear outcome to the US election certainly helped sentiment later in the week. Whilst Biden is likely to continue a tough stance on US-China trade talks, he is predicted to take a less confrontational and volatile approach compared with Trump. With this move higher, the MSCI China Index is nearing all-time highs.

US election aside, the main story in Asia last week was the cancellation of the Ant Group IPO. This  US$37 billion deal was the largest IPO globally and set to launch last Wednesday. At the last minute, the Chinese authorities pulled the plug on it, stating the deal failed to meet “the issuance and listing conditions or information disclosure requirements”. From a market perspective, if there were US$37 billion of funds set aside for this deal, the flow of that capital back  into the market could have also underpinned indices last week.

In Japan, the Nikkei Index is now trading at levels last seen in 1991, as strong corporate earnings from the likes of Toyota helped the push higher.

Last week saw Australia’s central bank cut interest rates to a fresh record low (the rate is now 0.1%) and announced an AUD$100 billion bond-buying program as it seeks to help drive a rapid economic recovery. The Reserve Bank of Australia (RBA) went on to state: “If the circumstances require, the board is prepared to do more and undertake additional purchases”.

In terms of macro data, the standout was stronger Chinese Purchasing Manager’s Index (PMI) figures. We had Caixin China Manufacturing 53.6; Services at 56.8 and the Composite at 55.7.

Week Ahead

A second wave of COVID-19 infections and a return to stricter containment measures will continue to cast a heavy shadow over Europe. Inflation data and eurozone GDP will be in focus, with the latter expected to confirm a third-quarter rebound. Still, the pace of the recovery was slowing even towards the end of the quarter, and industrial production data are likely to show slow progress in September.

While GDP figures for the United Kingdom will likely also show a healthy recovery in the third quarter, the economy will likely be almost 10% below its pre-crisis peak. With the country now in a second lockdown, GDP is set to contract in the fourth quarter.

On 9 November, talks between the United Kingdom and EU on a Brexit trade deal are scheduled to continue in London. Tuesday is EU’s target date for triggering tariffs on as much as US$4 billion of US goods in retaliation over illegal aid to Boeing Co.

Monday 9 November  

  • Economic/Political:
    • UK-EU Brexit trade-deal talks continue. Johnson’s Internal Market Bill continues its passage through parliament (the Committee stage in the House of Lords); the World Trade Organisation plans to announce a new leader.
    • ADIPEC 2020 virtual strategic conference: speakers include the energy ministers of Saudi Arabia, Russia and the United Arab Emirates.
    • Key speakers: BoE’s Andrew Bailey & Andy Haldane; ECB’s Olli Rehn & Yves Mersch.
  • Data: 
    • Germany Trade & Current Account Balance.

Tuesday 10 November     

  • Economic/Political:
    • EU’s target date for triggering tariffs on up to US$4 billion of US goods in retaliation over illegal aid to Boeing.
  • Key speakers: ECB’s Knot.
  • Data: 
    • Germany ZEW; France unemployment rate; UK Claimant Count & ILO unemployment rate; France Manufacturing & Industrial Production; Italy Industrial Production; US JOLTS Job Openings Rate.

Wednesday 11 November   

  • Economic/Political:
    • OPEC monthly Oil Market Report released.
    • Key speakers: ECB’s Christine Lagarde (@ ECB Forum on Central Banking)
  • Data: 
    • Sweden unemployment rate.

Thursday 12 November    

  • Economic/Political:
    • Key speakers: ECB’s Lagarde, BoE’s Bailey, Fed’s Powell at ECB Forum.
  • Data:
    • UK monthly GDP & trade balance; UK Industrial & Manufacturing Production; Germany CPI; eurozone industrial production.

Friday 13 November  

  • Economic/Political:
    • G-20 finance ministers and central bankers meet.
    • Key speakers: BoE’s Bailey; ECB’s Jens Weidmann.
  • Data: 
    • France CPI; Spain CPI; eurozone GDP & trade balance.


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All investments involve risk, including possible loss of principal. The value of investments can go down as well as up, and investors may not get back the full amount invested. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Bond prices generally move in the opposite direction of interest rates. Thus, as prices of bonds in an investment portfolio adjust to a rise in interest rates, the value of the portfolio may decline. Investments in foreign securities involve special risks including currency fluctuations, economic instability and political developments. Investments in developing markets involve heightened risks related to the same factors, in addition to those associated with their relatively small size and lesser liquidity. Past performance is not an indicator or guarantee of future performance.

This article reflects the analysis and opinions of Franklin Templeton’s European Trading Desk as of 9th November 2020, and may vary from the analysis and opinions of other investment teams, platforms, portfolio managers or strategies at Franklin Templeton. Because market and economic conditions are often subject to rapid change, the analysis and opinions provided may change without notice. An assessment of a particular country, market, region, security, investment or strategy is not intended as an investment recommendation, nor does it constitute investment advice. Statements of fact are from sources considered reliable, but no representation or warranty is made as to their completeness or accuracy. This article does not provide a complete analysis of every material fact regarding any country, region, market, industry or security. Nothing in this document may be relied upon as investment advice or an investment recommendation. The companies named herein are used solely for illustrative purposes; any investment may or may not be currently held by any portfolio advised by Franklin Templeton. Data from third-party sources may have been used in the preparation of this material and Franklin Templeton (“FT”) has not independently verified, validated or audited such data. FT accepts no liability whatsoever for any loss arising from use of this information and reliance upon the comments, opinions and analyses in the material is at the sole discretion of the user. Products, services and information may not be available in all jurisdictions and are offered by FT affiliates and/or their distributors as local laws and regulations permit. Please consult your own professional adviser for further information on availability of products and services in your jurisdiction. 

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MeDirect Bank launches an innovative and user-friendly online banking platform

MeDirect Bank launched a new innovative online banking portal to provide its clients with a modern internet banking experience and intelligent online self-service tools.

The new desktop version, which is also viewable from portable devices and smartphones, is an upgrade of the previous one and is an important milestone in the digital transformation strategy that MeDirect has started a year ago. The fresh new design makes it easier to navigate and discover new features.

Arnaud Denis, CEO of MeDirect said: “Providing our clients with the best-in-class online banking, with all services and products, in one easy-to-use platform and with information that is timely and professionally displayed, is key for MeDirect to continue growing and become the leader in digital banking.”

The log on details that clients use to access the online banking portal will not change, but the design of the page has been updated. The Bank remains committed to continue using the latest security measures to protect clients’ money and personal information.

The homepage and menu structure were refreshed with additional widgets showing overall balances in accounts and value of investments. The new platform gives clients the facility to drill down to see the transaction history, account details and other account information that clients might need. The search functionality has been enhanced to allow clients to search their transaction history, not only by date ranges, but also by using specific words which may be available in the description of the transactions.

The platform has also introduced improvements in the opening of additional accounts, including notice, term deposit and trading accounts. This is especially true in the case of joint account applications that can be opened with a few steps. The upgrade will allow clients to create an account with a friendly name and to immediately fund that account.

Pawel Malukiewicz, MeDirect’s Group Head of Channels and Customer Experience said: “We’re absolutely delighted to launch our new online banking platform. We’ve listened extensively to feedback from our clients on what they look for when using their online banking and have designed this platform with them and their needs in mind. As a bank, we want to deliver unparalleled levels of service and convenience and we are confident that the new platform will make our customers’ online banking experience better than ever.”

MeDirect’s eBanking platform makes use of 2-factor authentication for added security and peace of mind.

“It is evident that our clients want to do more of their banking via digital channels, and thus as a digital bank we need to continue to make banking as simple and secure as possible,” said Chris Portelli, MeDirect’s Group Head of Technology.

Clients also have the opportunity to use MeDirect’s mobile phone application, which is available from the App Store and Play Store. The bank continues to work on the further development of its digital channels to offer its clients more innovation.

The new online banking platform is part of MeDirect Bank’s ongoing investment in its infrastructure and part of an overall evolution of the Bank’s electronic channels. To learn more about MeDirect, to become a client or to log on to view you accounts, you can visit

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