Stocks higher on US stimulus progress

Stocks higher on US stimulus progress 150 150 Realm

A new $1 trillion US relief plan was put forward on Monday. Markets are hoping that talks can now progress to pass the bill. However, new spikes in coronavirus cases in a number of countries may temper investors enthusiasm.

Global Macro

  • Gold prices hit an all-time high of $1945.65 per troy ounce on Monday amid a plunge in the USD and as concerns about the global economic outlook and rising tensions between US-China boosted demand for a safe haven. Spot prices traded as high as $1945.65 before paring gains to wrap around $1,937, beating the previous record set in 2011. Investors are pricing expectations of a steady rise in inflation due to the Fed’s relief measures and stimulus bills from the US Congress. Also, the second waves of COVID-19 pandemic are emerging from China to Spain with the number of people infected across the world crossing 16.2 million.
  • New orders for US manufactured durable goods rose 7.3 percent month-over-month in June of 2020, following a downwardly revised 15.1 percent jump in May and beating market forecasts of 7 percent. Demand for transportation equipment jumped 20 percent, mainly due to motor vehicles and parts (85.7 percent) while defense aircrafts and parts plunged 30.6 percent.
  • The number of people registered as out of work in mainland France fell by 202.7 thousand from the previous month to 3.965 million in June of 2020. Unemployment among people aged 25 to 49 decreased by 130.5 thousand to 2.364 million, and that among young people went down by 30.5 thousand to 0.590 million. Also, unemployment among those aged 50 or more dropped by 41.7 thousand to 1.011 million. Compared with the same month of the previous year, registered jobless advanced by 580.8 thousand.
  • The Ifo Business Climate indicator for Germany rose by 4.2 points from the previous month to a five-month high of 90.5 in July 2020, recovering further from an all-time low reached in April and beating market expectations 89.3. The gauge measuring companies’ expectations for the coming months improved considerably (97.0 vs 91.6 in June) following the easing of the coronavirus-induced lockdown. In addition, firms assessed their current situation as slightly better (84.5 vs 81.3). Sentiment improved among manufacturers (-12.0 vs -22.7), service providers (2.0 vs -6.0), traders (-5.2 vs -14.2) and constructors (-2.4 vs -7.7).
  • Hong Kong trade deficit narrowed to HKD 33.3 billion in June 2020 from HKD 34.7 billion in the corresponding month of the previous year. Imports dropped 7.1 percent to HKD 338.9 billion, mostly due to lower purchases of non metallic mineral manufactures (-51.1%); miscellaneous manufactured articles (-29.1%); and photographic apparatus, equipment and supplies, optical goods, watches and clocks (-43.8%).
  • On Monday: European stocks ended mostly lower, as investors largely refrained from making significant moves, looking ahead to more stimulus announcements from the U.S. and other governments across the world, and escalating U.S.-China tensions. Asian stocks turned in a mixed performance as signs that coronavirus infections may be slowing and hopes for a new stimulus deal in Washington offset simmering U.S.-China tensions. US stocks Following the pullback seen late last week, stocks moved back to the upside during trading. The tech-heavy Nasdaq showed a particularly strong upward move, as some traders cycled back into big-name tech stocks.
  • Monday’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.’