Market Commentary - July 2, 2020
Asian Shares saw gains today on back of news that there may be a potential vaccine to the coronavirus.
Figure 1 (Source IS Prime): IDX.HK.50 trades higher despite new security laws
Other headlines earlier today come from the U.S. House of Representatives who will allow for an extension of a $660bln lending program. Senate approved yesterday.
St. Louis Federal Reserve Bank president James Bullard has warned that a growing number of bankruptcies due to the coronavirus outbreak could lead to a financial crisis, the Financial Times reported.
In the UK, we saw a report from the The Daily Telegragh which stated the British government will ditch its air bridge plans and end the quarantine rules for those arriving from a basket of 75 approved countries.
- Nasdaq saw highs last seen in over two decades and the EU markets their best since 2015
- US ISM Manufacturing PMI jumped from 43.1 to 52.6 due to businesses re-opening
- ADP Non-Farm Employment Change drops from 3,065k to 2,369k. US companies added fewer jobs than expected in June as lots of restaurants and firms reopened for business.
- The balance on goods and services in AU was a surplus of $8,025m in May 2020, an increase of $195m on the surplus in April 2020.
Fight or flight, as new security laws sweep across HK, thousands march resulting in over 300 arrests. Pro-democracy lawmakers proclaim the end of free speech as bankers and head-hunters caution flight of capital and talent from the city in the coming months. Investor sentiment though seemingly positive with reforms bringing much needed stability and confidence in markets.
Global market volatility anticipated to remain benign on Friday as the United States on break in preparation for Independence Days.
- Round 2. Disappointing headline ADP figures yesterday tempered market momentum, however investors sentiment remains unfazed on today’s non-farm employment change and unemployment rate expectations. US seen adding just over 3M jobs in June from people returning to work as the unemployed decline to 12.4% from 13.3%. In stark contrast unemployment claims settling just above the 1.3M mark.
- Across the Atlantic, stricter lockdown rules assisted greatly in flattening the inflection case curve, at the expense of a capsized labour market with the EU’s unemployment predicting to increase to 7.6%.
- Natural Gas Storage set to decline to 77B as excess inventory from previous months curtail production from producers of whom planned to reduce capital spending and drilling levels in the coming months.
- Inflation remains mute in Switzerland expected to edge upwards to 0.1%
- US Factory Orders rebound after 2 consecutive months of declining demand from -13% to 8.6%
- Strength to strength with AU retail sales continuing it’s monumental surge of 16.3% MoM.
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Topics: Market Commentary