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Chinese economy rebounds but stocks lower

Chinese economy rebounds but stocks lower 150 150 Realm

Data showed that China’s GDP grew by 3.2% in the second quarter, beating expectations. Stocks are lower today however, on reports of ever rising coronavirus numbers in the US.

 

Global Macro

  • Total industrial production in the United States rose 5.4% from a month earlier in June 2020 after increasing 1.4% in May, beating market expectations of a 4.3% growth. That was the largest increase in industrial production since December 1959, as many businesses resumed operations following coronavirus-related restrictions. Manufacturing output climbed 7.2%, but it was still 11.1% below its pre-pandemic February level, as motor vehicles and parts jumped 105.0%, while factory production elsewhere rose 3.9%. In addition, utilities output grew 4.2%, as both gas and electric utilities posted gains, while mining output fell 2.9%, with declines in nearly all categories. For the second quarter as a whole, industrial output fell 42.6% at an annual rate, its largest quarterly decrease since the industrial sector retrenched after World War II.
  • Oil prices rose more than 2% on Wednesday, after the EIA reported the largest drop in US crude inventories in more than six months, in line with data released by the API that showed the US crude inventories tumbled by the most since August 2019. This suggested that fuel demand is improving despite the rapid spread of the coronavirus outbreak across the world. On the supply side, OPEC and its allies are set to decrease the record production cuts to 7.7 million bpd in August and until December.
  • Import prices in the US increased 1.4% month-over-month in June 2020, following a 0.8% increase in May and easily beating forecasts of a 1.0% advance. It was the largest monthly increase in import prices since March 2012 led by a record rise in fuel prices (21.9% vs 15.4% in May). Prices for import petroleum rose 23.0%, after advancing 16.1%, and natural gas prices increased 6.8% following a 6.4% rise the previous month. Nonfuel import prices rose 0.3% in June, after a 0.1% gain in May. Year-on-year, import prices fell 3.8%.
  • Export prices in the US increased 1.4% from a month earlier in June of 2020, following a downwardly revised 0.4% rise in
    May and above market expectations of 0.8%. It was the biggest rise in export prices since March of 2011. Nonagricultural
    exports advanced 1.4% in June, after rising 0.5% the previous month, the largest monthly advance since March 2011 led
    by higher prices for nonagricultural industrial supplies and materials which more than offset declining prices for capital
    goods and nonagricultural foods.
  • On Wednesday: European stocks rebounded as investors cheered positive updates on a potential Covid-19 vaccine and pinned hopes on EU stimulus. Asian stocks moved broadly highly amid optimism about a potential coronavirus vaccine, although Chinese markets fell on rising U.S.-China tensions. US stocks fluctuated over the course of the trading session on Wednesday but largely maintained a positive bias before ending the day mostly higher. Adding to the strong gains posted in the previous session, the Dow and the S&P 500 finished the day at their best closing levels in over a month.
  • Wednesday’s data below:

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