Stocks are lower with focus back on coronavirus

Stocks are lower with focus back on coronavirus 150 150 Realm

Market focus seems to have shifted from the optimisim over the EU recovery fund deal to the concerns over the coronavirus pandemic, especially in the US with President Trump saying it will “get worse before it gets better”.

 

Global Macro

  • Spot gold rose more than 1% to $1,840 an ounce on Tuesday, a level not seen since September of 2011 on expectations of higher inflation due to prospects that central banks and governments around the world will continue to step up efforts to support the economies hardest hit by the coronavirus fallout. EU leaders clinched a deal on a €750 billion recovery fund, of which €390 billion will be distributed as grants and €360 billion as low-interest loans, with the new debt paid by 2058. In the United States too, congressional Republicans announced plans to seek another $1 trillion in economic relief. At the same time, Silver soared around 5% toward $21 an ounce for the first time since July of 2014.
  • Oil prices rose more than 3% on Tuesday, with WTI futures around $42.2 a barrel and Brent crude near $44.7 a barrel boosted by optimism over a potential coronavirus vaccine as German biotech firm BioNTech, US drugmaker Pfizer and Oxford-AstraZaneca reported positive results in early trials and a EU stimulus package. European leaders reached an agreement on a €750 billion coronavirus recovery fund to support the most affected economies after almost five days of negotiations. Also, prices were supported by China’s reopening efforts, as some cinemas resumed operations after being closed for six months.
  • The annual inflation rate in Hong Kong fell to 0.7 percent in June 2020 from 1.5 percent in the previous month and below market expectations of 1.7 percent. It was the lowest inflation rate since March 2017, as prices slowed for food (2.7 percent vs 4.8 percent in May), in particular pork; housing (1.4 percent vs 1.6 percent); and miscellaneous goods (2.7 percent vs 2.9 percent).
  • The UK reported a GBP 34.8 billion budget deficit in June of 2020 compared to a GBP 6.5 billion gap a year earlier and higher than expectations of a GBP 34.3 billion shortfall. Excluding public sector-owned banks, borrowing was GBP 35.5 billion, roughly five times that in June 2019 and the third highest borrowing in any month since records began in 1993. Borrowing in the first quarter of this financial year (April to June) is estimated to have been GBP 127.9 billion, GBP 103.9 billion more than in the same period last year and the highest borrowing in any April to June period on record.
  • On Tuesday: European stocks rose and the euro hit its strongest level since early March after the European Union (EU) struck a historic deal on a €750 billion ($857 billion) coronavirus recovery fund and the bloc’s long-term budget. Asian stocks rose as positive results from trials of experimental Covid-19 vaccines helped ease worries about the spike in coronavirus cases worldwide and investors welcomed an EU accord on a landmark stimulus package to fight the aftershocks of the pandemic. US stocks After ending the previous session mostly higher, stocks turned in a mixed performance during trading on Tuesday. The S&P 500 reached its best closing level in five months, while the tech-heavy Nasdaq gave back ground after spiking to a record closing high on Monday.
  • Tuesday’s data below:

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