Stocks lower today after virus cases surge in US

Stocks lower today after virus cases surge in US 981 980 Realm

Markets are focusing on the latest report from the World Health Organization which shows the largest single-day increase in coronavirus cases and the reproduction rate in Germany which has surged above 2.


Global Macro

  • The US economic recovery from the coronavirus pandemic is set to be challenging and there will take time and work, Fed Chairman Jerome Powell said during a video conference hosted by the Federal Reserve Bank of Cleveland on June 19th. Powell added that the cruelty of pandemic has been outsized effects of many areas that were already suffering and it has exposed a range of inequalities. The Federal Reserve left the target range for its federal funds rate unchanged at 0- 0.25%on June 10th 2020 as expected.
  • The Eurozone current account surplus narrowed to EUR 10.21 billion in April of 2020 from EUR 13.26 billion in the corresponding month of the previous year, below market expectations of a EUR 26.8 billion surplus. The goods surplus fell to EUR 12.64 billion from EUR 23.09 billion and the secondary income gap widened to EUR 10.73 billion from EUR 10.57 billion. On the other hand, the services account posted a EUR 1.20 billion, compared to a EUR 0.4 billion gap a year earlier and the primary income surplus rose to EUR 7.1 billion from EUR 1.18 billion.
  • The UK reported a GBP 54.5 billion budget deficit in May of 2020 compared to a GBP 5 billion gap a year earlier and higher than expectations of a GBP 47.3 billion shortfall. It is a new record budget deficit due both to the introduction of public health measures and from new government policies to support businesses and individuals during the coronavirus pandemic. Excluding public sector-owned banks, borrowing was GBP 55.2 billion, roughly nine times more than in May 2019, and also the highest borrowing ever. Borrowing in April to May 2020 is estimated to have been GBP 103.7 billion, GBP 87 billion more than in the same period last year, the highest borrowing in any April to May period on record. Borrowing in April 2020 was revised down by GBP 13.6 billion to GBP 47.8 billion, largely because of stronger than previously estimated tax receipts and National Insurance contributions and lower expenditure than previously estimated associated with the Coronavirus Job Retention Scheme.
  • The US current account deficit narrowed by $0.1 billion to $104.2 billion in Q1 2020, compared to expectations of a $103 billion gap. It is the lowest shortfall since Q2 2018, in part due to the impact of the coronavirus, as many businesses were operating at limited capacity or ceased operations completely, and the movement of travelers across borders was restricted. Exports of goods decreased $8.4 billion to $403.0 billion, mostly civilian aircraft and jewelry and collectibles. Imports of goods fell $18.6 billion to $595.3 billion, mainly cell phones computers and telecommunications equipment. Both exports and imports of services declined due to travel, primarily other personal travel, and transport, primarily air passenger transport. Thus, the goods and services deficit shrank to $119.1 billion from $129.8 billion. Also, the primary income surplus narrowed to $52.5 billion from $62 billion and the secondary income gap widened to $37.6 billion from $36.5 billion.
  • On Friday: European stocks ended mostly higher as optimism about economic recovery after the European Union’s proposal for a massive fiscal stimulus helped offset concerns about a second wave of coronavirus infections and prompted investors to pick up stocks. US stocks tumbled into the red around noon, failing to hold strong early gains, and despite a couple of attempts to rebound into positive territory. Asian stocks rose as optimism about a possible global economic recovery helped investors shrug off a second wave of coronavirus infections.
  • Friday’s data below:

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