Stocks higher with the focus on economic recovery despite accelerating coronavirus cases in US.
- The coronavirus will dominate the headlines as investors fear that a second wave of infections could delay the easing of restrictions. Elsewhere, the EU and the UK will be meeting to discuss Brexit, while European finance ministers are set to debate the bloc’s budgetary situation. Important data to follow include US ISM non-manufacturing PMI, Germany factory output and orders, China inflation data, Japan machinery orders and India industrial output. Central bank meetings in Australia and Malaysia will also be keenly watched.
- The IHS Markit/CIPS UK Composite PMI came in at 47.7 in June 2020, little-changed from a preliminary estimate of 47.6 and compared to the previous month’s 30.0. Manufacturing production rebounded and service activity contracted at a softer pace as the economy reopened following months of disruption caused by the coronavirus pandemic.
- The IHS Makit Germany Composite PMI was revised higher to 47 in June of 2020 from a preliminary of 45.8 and compared to 32.3 in May. Both manufacturing (45.2 from 36.6) and services (47.3 from 32.6) improved although still pointed to big contractions due to the coronavirus and the subsequent easing of lockdowns. Weighing on current activity levels was a continued lack of demand and, in particular, a sustained slump in new export business. There were some hopeful signs, however, as firms reported the smallest drop in order books during the crisis so far. On the price front, the recent downwards pressure on prices eased in June. Average charges for goods and services fell at the slowest rate in four months as costs neared stabilisation. Business confidence towards future activity meanwhile recovered strongly, with both monitored sectors seeing record increases in sentiment.
- The IHS Markit United Arab Emirates PMI jumped to 50.4 in June 2020 from 46.7 in May. This was the first growth in the non-oil private sector since December last year as the country continued to relax measures designed to stop the spread of COVID-19. Output expanded for the first time in six months, and new orders rose the most since August 2019 amid improving demand both at home and abroad. Meantime, job shedding accelerated to one of the fastest seen in the series history, with backlogs rising for the ninth month in a row that was also the strongest for three months. Prices data showed purchasing costs increased for the second month in a row, in part due to higher demand for inputs, whereas selling charges fell again in a sequence stretching back to October 2018. Looking forward, the outlook for future activity improved for the first time since March.
- On Friday: European stocks ended lower as rising coronavirus cases in the U.S. raised fears of another lockdown in several states and dimmed hopes about a quick economic recovery notwithstanding recent upbeat data from China and the U.S. Asian stocks rose as upbeat economic data from the U.S. and China helped spur fresh optimism about the economic recovery from the Covid-19 pandemic. US stocks: After failing to sustain an early rally, stocks gave back some ground over the course of the trading session on Thursday. The major averages pulled back well off their best levels of the day but still managed to close in positive territory, with the Nasdaq reaching a new record closing high.
- Friday’s data below:
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