Stocks and US Futures up after tech giants report

Stocks and US Futures up after tech giants report 150 150 Realm

European stocks and US futures are higher this morning after earnings reports from US tech giants Apple and Amazon that were much better than expectations.


Global Macro

  • The Official NBS Non-Manufacturing PMI edged down to 54.2 in July 2020 from 54.4 in the prior month. Still, this marked the fifth consecutive month of growth in the service sector.
  • The Official NBS Manufacturing PMI in China unexpectedly rose to 51.1 in July 2020 from 50.9 in the previous month and beating market estimates of 50.7. This was the fifth straight month of increase in factory activity and the strongest since March, as the economy continues to recover after the government lifted strict COVID-19 lockdowns and ramped up investment.
  • The US economy shrank by an annualized 32.9% in the second quarter of 2020, compared to forecasts of a 34.1% plunge, the advance estimate showed. It is the biggest contraction ever, pushing the economy into a recession as the coronavirus pandemic forced many businesses including restaurants, cafes, stores and factories to close and people to stay at home, hurting consumer and business spending. Decreases were seen in personal consumption, exports, private inventory investment, nonresidential fixed investment, residential fixed investment, and state and local government spending while federal government spending jumped.
  • The number of Americans filling for unemployment benefits rose 1.43 million in the week ended July 25th, lifting the total reported since March 21st to 54.1 million and compared to market expectations of 1.45 million. It was also the second consecutive week that claims have increased at a faster pace as a resurgence in new COVID-19 cases forced several states to scale back or pause the reopening of their economies.
  • Consumer prices in Germany are seen decreasing 0.1% from a year earlier in July 2020, the first month of deflation since April 2016 and compared to market expectations of a 0.2% rise. Goods prices should fall 1.4% (vs 0.2% in June) led by a decline in energy cost (-6.7% vs -6.2%) and a slowdown in food inflation (1.2% vs 4.4%). At the same time, services prices are set to increase at a slower pace (1.2% vs 1.4%). On a monthly basis, consumer prices are expected to drop 0.5%, the most since January and compared to forecasts of a 0.2% fall.
  • On Thursday: European stocks ended sharply lower as stocks plunged due to a heavy sell-off as worries about the impact of the coronavirus pandemic mounted after data showed a sharp contraction in U.S. GDP, and on the Federal Reserve’s weak outlook for the economy. Asian stocks ended mixed on Thursday as the relentless surge in coronavirus cases around the world offset investor optimism over the Federal Reserve’s dovish policy statement. US stocks After falling sharply early in the session, stocks showed a significant rebound over the course of the trading day on Thursday. The major averages climbed well off their worst levels of the day, with the tech-heavy Nasdaq bouncing into positive territory.

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.’