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Stocks higher on US China optimism

Stocks higher on US China optimism 150 150 Realm

Stocks are higher in the UK and Europe this morning after talks to “discuss implementation of the historic Phase One Agreement between the United States and China,” were described as “constructive” by China with the US saying both sides “see progress and are committed to taking the steps necessary to ensure the success of the agreement.”.

 

Global Macro

  • The Chicago Fed National Activity Index in the US fell to 1.18 in July of 2020 from a record high of 5.33 in June and compared to market forecasts of 2.73. The reading pointed to slower growth in economic activity compared to June but still well-above-average (0.01). All four broad categories came lower than in June but three made positive contributions: production-related (1.09 vs 2.21); employment-related (0.38 vs 1.94); personal consumption and housing (0.02 vs 0.42) and sales, orders and inventories (-0.31 from 0.77).
  • Copper traded above $2.9 per pound, remaining close to its highest level since June 2018, as supply concerns mounted. Copper stockpiles in LME-approved warehouses hit their lowest since August 2007, while global copper mine output is seen falling in 2020 as mining operations in some countries were disrupted by the COVID-19 pandemic. Copper was already on a strong uptrend in recent months amid hopes for a recovery in metals demand following global efforts to quickly restart economic activity from the coronavirus-induced slump.
  • COVID-19 deaths worldwide passed 800 thousand and cases rose to more than 23 million, according to data from Johns Hopkins University. The US remains the hardest-hit country, having registered nearly 177 thousand deaths and 5.70 million cases. Elsewhere, Brazil reported almost 115 thousand deaths, followed by Mexico (60.5 thousand), India (57.5 thousand) and the UK (41.4 thousand). In terms of cases, only two other countries have recorded more than one million COVID-19 infections: Brazil (3.61 million) and India (3.11 million).
  • Natural gas prices have gained further ground in August, showing some resistance just below the key $2.50 level, as a result of hot weather and cooling demand. There are now one tropical storm and one hurricane heading right for the Gulf of Mexico and is likely to hit natural gas infrastructures. Natural-gas prices have soared more than 65% since late June to an eight-month high of $2.47/MMBtu on August 21.
  • On Monday: European stocks closed firmly higher with global market sentiment supported by hopes of a potential COVID-19 treatment after the USFDA authorized the use of blood plasma to treat hospitalized patients. Oil and gas companies led the gains helped by a jump in crude prices as storms reaching the Gulf of Mexico forced many producers to shut. US stocks moved significantly higher over the course of the trading session on Monday, adding to the gains posted last week. With the upward move, the Nasdaq and the S&P 500 reached new record closing highs, while the Dow ended the session at its best closing level in six months. Asian stocks rose as life started to return to normal in China and the U.S. Food and Drug Administration granted emergency authorization for the use of blood plasma to treat hospitalized coronavirus patients.

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