European markets lower ahead of big earnings day

European markets lower ahead of big earnings day 150 150 Realm

Stocks are lower this morning with major companies reporting earnings later. Following its two-day monetary policy meeting the Fed held interest rates with Chairman Jerome Powell saying they weren’t “thinking about thinking about” raising at this point. Second wave coronavirus worries remain in focus.

 

Global Macro

  • The Federal Reserve left the target range for its federal funds rate unchanged at 0-0.25% as expected. Policymakers reiterated the Fed is committed to using its full range of tools to support the US economy and repeated the coronavirus pandemic poses considerable risks to the economic outlook over the medium term. Officials also pledged to maintain the bond purchases and the array of lending and liquidity programs at least at the current pace.
  • Contracts to buy previously owned homes in the US rose 6.3% over a year earlier in June of 2020, following a 5.1% fall in the previous month. It is the first gain in four months in a sign that the housing market may be recovering from the coronavirus crisis. Sales increased in the South (10.3%), the Midwest (5.1%) and the West (4.7%) but fell in the Northeast (-0.9%).
  • The Baltic dry index, which tracks rates for ships ferrying dry bulk commodities, rose for the first time in over a week to above 1,310 points, recovering from a one-month low hit on July 28th. Rates for larger capesize and panamax vessels bounced back amid signs of global economic recovery. Still, a rise in new Covid-19 cases worldwide threatens to disrupt global supply chains once again. For the month, the index dropped nearly 27%, having touched a nine-month peak of 1,956 on July 6th.
  • The US trade deficit on goods narrowed to USD 70.64 billion in June 2020 from a revised USD 75.26 billion in the previous month, as global demand recovers from the coronavirus crisis shock, a preliminary estimate showed. Exports jumped 13.9%, boosted by sales of automotive vehicles (144.1%), capital goods (11.0%), consumer products (12.6%) and industrial supplies (9.6%). Exports of foods, feeds, & beverages, however, continued to fall (-5.2%). Imports were up 4.8% due to purchases of automotive vehicles (107.7%), consumer products (9.8%), capital goods (4.6%) and foods, feeds, & beverages (2.5%). On the other hand, industrial supplies imports tumbled 19.2% and purchases of other goods fell 4.1%
  • The economy of Hong Kong contracted 0.1% on quarter in the three months to June of 2020, following a record 5.3% plunge in the previous period, preliminary estimates showed. Yet, as the coronavirus pandemic was largely under control in Hong Kong in May and June, and the recovery of the Chinese economy also helped partly offset the external headwinds facing Hong Kong’s exports of goods, the overall economic situation showed signs of stabilisation during the quarter.
  • On Wednesday: European stocks finished mixed as investors remained cautious ahead of the US Federal Reserve’s monetary policy meeting later in the day, while monitored surging coronavirus infections and a mixed bag of quarterly corporate earnings. Europe continued to struggle with the threat of the pandemic and some countries already imposed restrictive controls to avoid it. Asian stocks ended mixed as investors awaited updates on a U.S. coronavirus relief bill and looked ahead to a Federal Reserve meeting for clues on the outlook for monetary policy. US stocks moved significantly higher over the course of the trading day, offsetting the pullback seen late in the previous session. The major averages all moved to the upside, although the Dow underperformed its counterparts.

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