Market Commentary - July 8, 2020
Global indices took a breather yesterday from recent rallies. With Nasdaq settling at historic highs, S&P500 being on a 5-day run and Hang Seng breaking out of a 3-month consolidation after the new security laws passed.
Talks of combating the the Hong Kong – USD currency board circulate however such a take would require a massive effort by the Fed since the HKMA reserves provide plenty of buffer room and has survived similar attacks throughout the history of its board.
Figure 1 (source Refinitiv Eikon): USDHKD daily chart -USDHKD maintains a tight band between $7.75 - $7.85. The stability in the USDHKD has allowed Hong Kong to prosper as a global financial center.
- US job openings surprise, breaking the tide and rebounding from 5M to 5.4M. Markets had expected a decline to 4.7M instead. Bringing weight to Trump Administrations claim that the $660 billion in small business pandemic aid program had in fact saved 51 million jobs. Though red flags have been raised over discrepancies within the enormous dataset. It’s hard to negate the programs contribution to recent upbeat non-farm and unemployment figures.
- Wrong again, as analyst expectations off the mark with UK HPI declining less than expected at -0.1% compared to -0.8%. Analyst tone thus far have been anticipating deteriorating conditions within a resilient UK housing market in the face of low interest rates.
- Canadian PMI back to pre-pandemic levels posting levels at 58.2 from 39.1.
- From the EU, Italian retail sales swing to historic levels with -10.7% to 24.3% MoM whilst, German industrial production disappoints MoM posting a 7.8% increase as opposed to an expected 11%.
With border controls implemented last night between Australias’ Victoria and NSW. Economist expect a downfall of $1B to the economy each week, with tourism and in turn businesses hit hardest. Containment an absolute priority for governments on both sides of the border. Failure to do so leaves officials no choice but to implement a 2nd round of strict lockdown rules. Of which many Aussie family’s question whether financially they would survive on their own with government handouts pulling back in September.
Again, with scarce major economic announcements today, expect mute markets. Nonetheless, of particular focus today
- China’s inflation figures as both CPI and PPI figures expected to find its footing at 2.5% and -3.2% respectively YoY.
- Japan’s core machinery orders set to recover but not yet bounce back with concensus at -5.2% from -12%
- Demand for US Consumer Credit still on the decline and recovering from -68.8B to -15.2B
- Eyes on Crude Oil inventory, as stated yesterday larger OPEC members have been determined to exceed output cut targets.
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Topics: Market Commentary