Following a lower open this morning, European markets are edging higher following major results from HSBC, and Societe General. Another big earnings week to come and potentially an agreement over new stimulus measures in the US although Mark Meadows, White House Chief of Staff, said on Sunday that he was “not optimistic” a deal could be reached imminently.
- The US earnings season continues next week with about a quarter of S&P 500 companies reporting second-quarter results. On the economic data front, US non-farm payrolls are seen rising by over 2 million in July and the jobless rate will likely fall to 10.3%. Elsewhere, central bank policy meetings in the UK, India, Brazil, Australia and Thailand will be in the spotlight as well as worldwide manufacturing and services PMIs. Other releases include trade figures for the US and China and GDP data for Indonesia and the Philippines.
- WTI crude futures settled up 0.9% at $40.3 on Friday, booking a third straight month of gains helped by a weaker dollar and a report from the US Energy Information Administration saying that US crude oil output tumbled by a record pace in May. In addition, investors cheered news that factory activity in China rose for the fifth month in a row and hoped for more stimulus in the US after official data showed the economy collapsed at a 32.9% annualized rate in Q2. Still, the recovery may be short lived as OPEC+ plans to increase output from Saturday, adding about 1.5 million barrels per day to global supply.
- Spot gold enjoyed its best month since February 2016, having touched a record high of $1,983 per ounce on Friday as the US dollar suffered its biggest monthly drop in almost a decade. Data showed on Thursday that the US contracted by the most on record in the second quarter, while investors fear that the recent spike in coronavirus cases could lead to additional lockdown measures and hamper the recovery. The dollar was also hit by President Donald Trump’s idea of delaying the November presidential election.
- Fitch Ratings changed on Friday 31 July 2020 the United States’ sovereign rating outlook to negative from stable and affirmed the debt grade at AAA, citing as main trigger behind the revision the ongoing deterioration in the U.S. public finances and the absence of a credible fiscal consolidation plan, issues that were highlighted in the agency’s last rating review on March 26, 2020. Standard & Poor’s credit rating for the United States stands at AA+ with stable outlook. Moody’s credit rating for the United States was last set at Aaa with stable outlook. DBRS’s credit rating for the United States is AAA with stable outlook.
- Personal spending in the US increased 5.6% month-over-month in June of 2020, following an upwardly revised 8.5% rise in May which was the biggest rise on record. Figures came slightly higher than market forecasts of a 5.5% rise. In numbers, real consumption went up by $623.0 billion, reflecting an increase of $273.7 billion in spending on goods and a $362.1 billion increase in spending on services. Within goods, the biggest gain came from clothing & footwear; and within services from health care, food services, and accommodations. Within health care, both hospital and outpatient services increased.
- On Friday: European stocks ended lower, with stocks giving up early gains following a sell-off in the final hour, as the mood turned bearish due to worries about the economic impact of the coronavirus pandemic. Asian stocks ended mostly lower after data showed a record contraction in U.S. economic activity in the second quarter. Coronavirus fears and the possibility of a delayed November election in the U.S. also weighed on the markets US stocks saw considerable volatility over the course of the trading session before eventually ending the day mostly higher. The major averages all moved to the upside late in the session, with the tech- heavy Nasdaq showing a particularly strong upward move.
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