Markets flat waiting for outcome of Fed meeting

Markets flat waiting for outcome of Fed meeting 150 150 Realm

Stocks are generally flat today in Europe following a number of earnings reports from major companies and ahead of the outcome of a two-day Federal Reserve meeting. The proposed $1 trillion coronavirus aid bill announced on Monday has received critiscism from Democrats and President Trump himself says he disagrees with certain aspects. Talks continue.

 

Global Macro

  • The US Federal Reserve announced an extension of its lending programs to businesses, governments and individuals to the end of 2020, saying that the three-month extension will facilitate planning by potential facility participants and provide certainty that the facilities will continue to be available to help the economy recover from the COVID-19 pandemic. US Fed officials are expected to maintain their accommodative stance after a two-day monetary policy meeting starting today, with investor focus turning to the central bank’s economic outlook for further details about future policy steps.
  • The S&P CoreLogic Case-Shiller 20-city home price index in the US rose 3.7 percent from a year earlier in May 2020, following a downwardly revised 3.9 percent increase in the previous month and missing market expectations of 4.0 percent, amid the coronavirus crisis. Phoenix recorded the biggest increase in home prices (9.0 percent), followed by Seattle (6.8 percent) and Tampa (6.0 percent), while the smallest gains were seen in Chicago (1.3 percent), New York (2.1 percent) and San Francisco (2.2 percent). The national index, covering all nine US census divisions, advanced 4.5 percent, down from 4.6 percent in the previous month.
  • The CBI distributive trades survey’s retail sales balance jumped to +4 in July 2020 from -37 in the previous month, its highest since April 2019 and well above market expectations of -25. Still, the latest reading signaled only modest year- on-year growth in sales as the COVID-19 pandemic continued to hurt the sector. Also, retailers expect a slightly weaker performance in August.
  • WTI futures traded around $41.5 a barrel during a volatile session on Tuesday as investors weigh rising coronavirus cases and prospects of more stimulus while the dollar paused its slide. Infections continue to spike from China to Spain and Germany, dampening the demand outlook for oil. Meanwhile, Republicans presented $1 trillion stimulus package which will now be negotiated with the Democrats. On the production side, OPEC+ is expected to taper output cuts from next week. Traders also await API data to be released later in the day. Meanwhile, the Brent was shifting between gains and losses to trade around $43.5 a barrel.
  • On Tuesday: European stocks closed mixed in another volatile session as a resurgence in COVID-19 cases forced several countries across the region to re-impose coronavirus-induced restrictions. Meanwhile, the ECB extended a recommendation to Eurozone banks to suspend dividend payments and share buybacks until the end of the year. Asian stocks ended mixed despite a flurry of positive news, ranging from hopes about additional fiscal stimulus in the U.S. to the launch of late-stage trials of experimental Covid-19 vaccines. US stocks moved mostly lower over the course of the trading day, largely offsetting the upward move seen in the previous session. The tech-heavy Nasdaq posted a particularly steep loss after outperforming its counterparts on Monday.

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