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Stocks lower following California shut-down

Stocks lower following California shut-down 150 150 Realm

U.K. and European stock-markets are down this morning following Wall Street lower after the state of California shutting down due to rapidly rising coronavirus cases. At the same time investors will be closely watching second-quarter earnings today as a number of major U.S. banks report.

 

Global Macro

  • Rating agency S&P Global cut its emerging market growth forecasts on Monday, predicting a 4.7 percent slump on average this year due to the coronavirus and warned that all countries would be left with permanent scars too. The firm said the downward GDP revisions mostly reflected the overall worsening pandemic for many emerging markets and a larger hit to foreign trade compared to its last set of expectations in April that predicted a 1.8 percent contraction..
  • Iron ore soared near the $110 per tonne mark in July, a level not seen since August of 2019, as a surge in coronavirus infections in Brazil has triggered worries of supply disruptions for iron ore, while demand in China remains strong. Optimist grew over prospects of demand in the world’s top producer and consumer of steel products after the Chinese government confirmed plans to boost steel consumption with pledges of higher spending on infrastructure.
  • Coal prices remained under heavy pressure in July amid oversupply concerns following strong production in Indonesia and Australia alongside with significantly weaker demand from China and India. The coal price, which has been hovering around $54 per tonne since April, is set to continue its downtrend until the end of the year pressured by the rise of renewable energy sources, especially wind and solar power. Japan’s government said it has changed its policy on financing coal power plants to encourage a regional shift towards cleaner energy.
  • The Baltic Exchange’s main sea freight index has surged above 1,800 points for the first time in over eight months in July mainly driven by rising demand for iron-ore from China as economic activity resumed after coronavirus-induced lockdowns. Still, the Baltic dry index eased from a multi-month peak of 1,956 touched on July 6th, as an increase in new coronavirus cases worldwide threatens to disrupt global supply chains once again.
  • On Monday: European stocks rose as investors looked ahead to the upcoming earnings season for signs of an economic recovery from the coronavirus-induced downturn. Asian stocks advanced as hopes for a quick economic recovery as well as reports of positive data in early stage coronavirus vaccine trials helped offset worries about a continued surge in new coronavirus cases worldwide. US stocks showed a strong move to the upside in morning trading on Monday but pulled back sharply over the course of the afternoon. The tech-heavy Nasdaq showed a particularly steep drop after reaching a new record intraday high.
  • Monday’s data below:

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