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Good morning. European countries are tightening Covid-19 restrictions, Brexit trade talks look set to continue and hopes of a pre-election U.S. stimulus package have faded. Here's what's moving markets.

Tightening Up

Europe is tightening its Covid-19 restrictions, and fast. An imminent change in rules in London is likely, according to an official in Mayor Sadiq Khan's office, which would ban two separate households from meeting indoors. The report comes amid a debate over whether or not an England-wide "circuit breaker" is needed. Elsewhere, France announced a curfew in Paris and other cities. In Ireland, all household visits are to end and non-essential businesses in some areas to shut, while Northern Ireland went further, closing schools, bars and restaurants. Germany is taking a softer approach, mainly urging citizens to abide by hygiene and distancing rules. Germany and Italy both reported a record number of new cases.

No Progress

It's a familiar story as much hype around a Brexit deadline comes to nothing. The pound rebounded from a one-week low against the dollar after the U.K. signalled it would continue trade talks with the European Union beyond Boris Johnson's Oct. 15 deadline. Both sides now consider the end of October or first few days of November as the real deadline for getting a deal, people familiar with the negotiations said. The sides have been unable to agree on several issues, including fishing rights and state aid, though German Finance Minister Olaf Scholz hinted he still expects a deal. EU leaders are starting a two-day summit in Brussels today. 

All But Gone

Brexit is far from the only issue lacking progress, with the chances of U.S. Congress passing a pre-election coronavirus stimulus deal all but gone. Treasury Secretary Steven Mnuchin indicated that politics undermined negotiations, agreeing that "part of the reality" is Democrats are holding back out of optimism they'll win a Senate majority and don't want to give President Donald Trump something to tout in his campaign. Democrats, meanwhile, say the White House never took either the coronavirus pandemic or the need for more stimulus seriously. U.S. stocks declined for a second day and futures in Europe are lower.

Banking Caution

U.S. banking profits are starting to resemble life before the pandemic, but investors aren't getting carried away with the idea that the industry's crisis has passed. In earnings reports this week, lenders have said they've tucked away most of what they will need to cover near-term losses on loans, and they're still benefiting from a virus-fuelled volatility trading boom. Yet share prices are lagging amid a clouded outlook. Morgan Stanley updates today after Goldman Sachs Group Inc. reported bond unit strength but Bank of America Corp. underwhelmed on Wednesday. Big European lenders start reporting next week. 

Coming Up…

Outside of financials, drugmaker Roche Holding AG and media firm Publicis Groupe are reporting earnings this morning, while luxury giant LVMH comes later. Data include Italian industrial orders and U.S. weekly initial jobless claims, while statistics earlier showed China's consumer inflation slowed in September, driven by a moderation in food price gains.

What We've Been Reading

This is what's caught our eye over the past 24 hours. 

And finally, here's what Cormac Mullen is interested in this morning

With activity in the options market once again ticking higher, a number of commentators have flagged the growing divergence between bullish bets on single stocks and bearish wagers on the broader equity indexes. The 5-day moving average of Cboe put/call ratios for U.S. equities and indexes -- a gauge of demand for bullish versus bearish bets -- are both at extreme levels, but in the opposite direction. For me there is nothing particularly ominous in the split, it's just a useful reminder that there is no such thing as ``the market'', just a bunch of unrelated participants with different goals, views and investment time horizons. The spike in activity in index puts smells of hedging activity for larger investors and traders ahead of the much-hyped event risk of the upcoming U.S. presidential election. And the surge in demand for bullish single stock bets is likely down to a revival of the retail frenzy for one-way wagers on megacap tech stocks. Both can co-exist, have implications for future equity market direction, and should be judged on their own merits. But combined the mismatch is unlikely to be more than a snapshot of a particular point in market time.

Cormac Mullen is a Cross-Asset reporter and editor for Bloomberg News in Tokyo. 

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