Coronavirus uptick being closely watched but markets higher today

Coronavirus uptick being closely watched but markets higher today 981 980 Realm

Investors are closely monitoring the resurgence in coronavirus cases in some countries. A centre for Disease Control in China said that a recent outbreak in Beijing is now under control. Tensions between China and the U.S. increased after President Trump again threatened to cut ties.


Global Macro

  • The Bank of England voted unanimously to maintain the key bank rate at a record low of 0.1% on June 18th 2020, in linewith market forecasts. Policymakers also voted by a majority of 8-1 to increase the target stock of purchased UK government bonds, financed by the issuance of central bank reserves, by an additional £100 billion, to take the total stock of asset purchases to £745 billion. Policymakers added that the fall in global and UK GDP in Q2 will be less severe than anticipated although the outlook remains unusually uncertain and the economy, and especially the labour market, will therefore take some time to recover.
  • The number of Americans filing for unemployment benefits eased slightly to 1.508 million in the week ended June 13th, the lowest level since the coronavirus crisis began three months ago but still above market expectations of 1.3 million. The previous week’s level was revised higher to 1.56 million from 1.54 million. Some investors believe the effects of the coronavirus pandemic on the job market is not fully captured by the claims reports as neither PUA (Pandemic Unemployment Assistance program) nor PEUC (Pandemic Emergency Unemployment Compensation) are included in the initial claims and continuing claims figures. Also, unemployment numbers are expected to rise when the Paycheck Protection Program, a loan that helps businesses keep their workforce employed, ends.
  • Oil prices rose on Thursday, with WTI futures trading around $38.7 a barrel and Brent crude around $41.3 a barrel as OPEC and allies met to review record output cuts. Iraq and Kazakhstan submitted plans to compensate oil overproduction compensation in the coming months.
  • The People’s Bank of China (PBoC) lowered its 14-day reverse repo rate to 2.35 percent from 2.55 percent on June 18th 2020. The 7-day reverse repo was left steady at 2.2 percent. The move was made through a CNY 70 billion injection into the country’s money market, after resuming operations on the liquidity tool for the first time since February. The bank also injected CNY 50 billion through seven-day reverse repos at 2.2 percent. The central bank said the operations were intended to safeguard stable liquidity conditions at the end of the first half of the year. With CNY 80 billion worth of reverse repos maturing on June 18th, the PBoC injected CNY 40 billion on a net basis.
  • On Thursday: European stocks recovered after a weak start Thursday morning, but faltered again before recovering some lost ground in the final hour. However, it was still a finish in the red for most of the markets in Europe, as worries about growth, news about rising coronavirus infections and geopolitical tensions weighed on sentiment. US stocks Following the lackluster performance seen in the previous session, stocks continued to experience choppy trading. The major averages bounced back and forth across the unchanged line before closing mixed for the second straight day. Asian stocks fell broadly as the rising number of coronavirus cases in Beijing as well as several U.S. states dampened investor euphoria over the potential economic recovery.
  • Thursday’s data below:

Disclaimer:  ‘Where the business has expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. The information contained within this communication is believed to be reliable but Realm Investment Management Limited does not warrant its completeness or accuracy. This communication is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell investments.