Stocks lower this morning as coronavirus concerns grow again

Stocks lower this morning as coronavirus concerns grow again 981 980 Realm

World Health Organisation said Monday that the pandemic is still accelerating. Some U.S. States are delaying re-opening as coronavirus cases climb. Stocks in U.K. and Europe are lower this morning.


Global Macro

  • Federal Reserve Chairman Jerome Powell said in remarks prepared for a Congressional hearing on Tuesday that the US economy faces “extraordinary uncertainty”, particularly in light of ongoing attempts to contain the spread of Covid-19. Powell also noted that the central bank’s Main Street lending facility may prove helpful for firms hit by the coronavirus crisis. The Federal Reserve left the target range for its federal funds rate unchanged at 0-0.25% on June 10th 2020 as expected, saying the US economic recovery from the coronavirus pandemic is set to be challenging and there will take time and work.
  • The People Bank of China pledged stronger fiscal and monetary adjustment and better policy coordination and implementation to help offset the impact of the coronavirus on economic growth. During its quarterly monetary policy committee meeting, the central bank said it will implement multiple monetary policy tools to maintain liquidity at a reasonable and sufficient level. It will also raise the proportion of smaller company, credit and manufacturing loans and maintain the stability of the yuan. The PBoC held its benchmark interest rates steady for the second straight month at its June fixing after the central bank maintained borrowing costs on medium-term loans last week, as policymakers adopted a wait-and-see approach amid tentative signs of economic recovery. The one-year loan prime rate (LPR) was left unchanged at 3.85% from the previous monthly fixing while the five-year remained at 4.65%.
  • The Federal Reserve Bank of Dallas’ general business activity index for manufacturing in Texas rose to -6.1 in June 2020 from the previous month’s -49.2, as the state reopened its economy following weeks of lockdown due to the coronavirus pandemic. The production index, a key measure of state manufacturing conditions, climbed to +13.6 from -28.0, indicating moderate expansion in output following three months of record or near-record declines. Other measures of manufacturing activity also pointed to a rebound in growth this month: new orders (up 33.5 points to +2.9, its first positive reading in four months); growth rate of orders (up 25 points to -5.8); capacity utilization (up 33.6 points to +7.6); and shipments (up 28.8 points to +3.1).
  • Contracts to buy previously owned homes in the US fell 5.1% over a year earlier in May of 2020, following a record 33.8% plunge in the previous month due to the coronavirus crisis. Sales continued to fall in the Northeast (-33.2%), the West (-2.5%) and the Midwest (-1.4%) but rose in the South (1.9%). On a monthly basis, pending home sales surged 44.3%, the biggest rise ever and following a record 21.8% fall in April. Figures beat market forecasts of an 18.9% rise as every major region recorded an increase in month-over-month pending home sales transactions.
  • On Monday: European stocks closed higher with investors betting on recovery after news about Gilead Sciences’ announcement about pricing plans for its coronavirus drug remdesivir. US stocks ended on a buoyant note despite several states in the country reporting sharp spikes in new coronavirus cases over the weekend. Asian stocks fell as a continued rise in cases of the novel coronavirus worldwide deepened fears of further economic pain.
  • Monday’s data below:

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