Market Commentary - July 10, 2020
There is seemingly no end in sight as Coronavirus cases surge. A combination of re-emerging hotspots and government reluctance to act swiftly has cascaded into state-wide infections and in-turn, lock down proceedings. Joining Australia NSW, Queenlands will block border entry from Victorians. Coming Saturday, Hong Kong will re-implement stricter social distancing measures. Curfews to be applied in Serbia. New Jersey to sign an order requiring masks to be worn when outside.
On the other side of the spectrum, whether in favor or against the strict policies implemented by China during their pandemic. Of global nations, China is emerging as the front-runner in successfully flattening the curve and subsequent waves. Investor confidence high with the Shanghai Composite Index breaking out of a year and half consolidation to 3,400. and Yuan appreciating beyond the 7.000 psychological level. Whilst the momentum may slow, with funding cost remaining low in the foreseeable future.
Figure 1 (Source: Refinitiv Eikon): CNY trades near 7.000
- US stocks were mixed yesterday. Technology stocks continue to rally, leading Nasdaq to a record high. Dow Jones and S&P 500 were lower. The trading was unstable since investors are concerned about the coronavirus outbreak and the tension between China and the US.
- The total number cases of coronavirus increase to 12.2 million while at least 552k lives has been taken. In the US, it has passed 3 million cases mark. The number of cases per day keep increasing, reaching 62k record high of new cases per day.
- US unemployment claims decreases from 1.413 million to 1.314 million, which is better than the expected 1.375 million. This marked a drop of 99k for a week. The better than expected jobless claims is showing the US jobs market is stabilizing.
- China CPI year to year increases from 2.4 to 2.5 and China PPI year to year increases from -33.7 to -3.0. compared with the forest 3.2 decline, it is better than the market expectation.
Singaporeans go to polls today with the prevailing People’s Actions Party (PAP) expected to win overwhelmingly. Last election, PAP enjoyed a 70% popularity vote winning atleast 93% of parliamentary seats. On the top of peoples’ agenda is how the newly elected government will steer the nation out of the pandemic and assure job creation.
- Industrial production figures coming out of the EU set to illustrate a stark contrast from previous months. Both French and Italian figures predicted to rebound from -20.1% and -19.1% to 15.2% and 23.5% respectively.
- Not the snap back Canadian’s expected but a comforting sign as Canada forecasted to announce 700K new hires MoM with the unemployment rate declining to 12% from 13.7%. Analyst expect the re-opening of Ontario and Quebec by allowing business to resume operations have weighed positively on last month’s data.
- US expected to post stable PPI figures at 0.4% MoM
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Topics: Market Commentary