Stocks higher on earnings season optimism

Stocks higher on earnings season optimism 150 150 Realm

European stocks and U.S. futures are higher today on optimism ahead of the second-quarter earnings season which kicks off in the U.S. this week and despite Florida’s single day record number of new coronavirus cases for any U.S. state on Sunday.


Global Macro

  • Second-quarter earnings season gets underway next week, with updates expected from major US health care companies and banks such as JPMorgan Chase, Citigroup and Wells Fargo. At the same time, EU leaders will meet to discuss a common recovery plan, while central banks in the Euro Area and Japan will be deciding on interest rates. Important releases to follow include US retail sales and industrial production; UK jobs report and monthly GDP; China Q2 GDP figures; Australia employment data, business and consumer morale; and India consumer and wholesale prices.
  • WTI crude futures settled 2.4% higher at $40.6 a barrel on Friday, little-changed on the week, after reports that Gilead Sciences’ antiviral remdesivir reduced mortality risk in COVID-19 patients by 62%. Prices also found support after the International Energy Agency (IEA) raised its 2020 oil demand forecast, following the easing of coronavirus lockdown measures in several countries across the world, while Baker Hughes’ data showed US energy firms cut the number of oil and natural gas rigs operating to a record low for a 10th week in a row. On the supply side, data from both the EIA and API showed a surprise build in US crude inventories last week.
  • The yield on the benchmark 10-year US Treasury note rose 2.8 bps to 0.633%, having touched 0.569% earlier in the session, its lowest level since April 22nd. Optimism about an antiviral drug to treat COVID 19 offset worries about a spike in coronavirus across the US. The two-year Treasury yield, which typically moves in step with interest rate expectations, was slightly up at 0.155%, while the five-year yield rose 2.4 bps to 0.298%. For the week, the 10-year yield lost about 5 bps.
  • Russia’s current account surplus narrowed sharply to USD 0.6 billion in the second quarter of 2020 from USD 9.9 billion in the corresponding period of the previous year, a preliminary estimate showed. The goods surplus shrank to USD 14.3 billion from USD 39.4 billion a year earlier and the secondary income deficit widened to USD 1.3 billion from USD 0.9 billion. Meantime, the services gap fell to USD 2.1 billion from USD 9 billion and the investment income shortfall decreased to USD 10.2 billion from USD 19 billion.
  • On Friday: European stocks recovered after a weak start and ended notably higher, with investors making some brisk purchases amid optimism about a potential coronavirus vaccine and on stronger-than-expected economic data from France and Italy. Asian stocks declined as a surge in coronavirus cases stoked fears that new lockdowns could take a toll on the economic recovery. Investors also turned cautious ahead of the corporate earnings season beginning next week. US stocks Following the pullback seen in the previous session, stocks showed a strong move back to the upside during trading on Friday.
  • Thursday’s data below:

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