fbpx

Stocks lower on doubts about economic recovery

Stocks lower on doubts about economic recovery 981 980 Realm

Accelerating global coronavirus cases are raising doubts over the possibility of economic recovery. The World Health Organisation stated it shouldn’t “be a surprise” if coronavirus deaths start to rise again.

 

Global Macro

  • China’s foreign exchange reserves, the largest in the world has expanded to $3.1123 trillion last month, official data showed on July 7.The amount increased by $10.6 billion, or 0.3 per cent, from the end of May, according to China’s State Administration of Foreign Exchange (SAFE). China’s forex market in June reported generally balanced supply and demand, said SAFE spokesperson Wang Chunying. China’s forex market in June reported generally balanced supply and demand, said SAFE spokesperson Wang Chunying.
  • The number of job openings in the US increased by 401K to 5.397 million in May recovering from an over five-year low in the previous month and more than a market consensus of 4.85 million, reflecting a limited resumption of economic activity that had been curtailed in March and April due to coronavirus lockdowns.
  • The IBD/TIPP Economic Optimism Index in the US fell to 44 in July of 2020 from 47 in June, reaching the lowest since September of 2015. The relapse likely reflects concern about the impact of surging Covid-19 cases, especially across the Sun Belt. Texas, Florida and Arizona are among states that have reversed some reopening steps, while a number of other states have hit the brakes on a further relaxing of social distancing restrictions. A growing number of localities are adopting mask mandates. Deepening economic pessimism raises the stakes for the next fiscal stimulus as the $600 weekly boost to unemployment benefits is set to expire July 31. The six-month outlook gauge fell 5.1 points to 37.3.
  • The European Commission lowered its GDP forecasts for 2020 and 2021, saying that the lifting of COVID-19 lockdown measures in some countries was proceeding less swiftly than it had initially predicted. The EU executive said the bloc would shrink by a record 8.7% this year, before rebounding by 6.1% in 2021, compared with early May estimates of a 7.7% contraction in 2020 and a 6.3% recovery next year. Among the bloc’s largest economies, Italy and Spain are seen posting the steepest contraction rates, with the GDP falling by 11.2 (vs -9.5% seen in May) and 10.9% (vs -9.4% seen in May), respectively. France’s economy is forecast to shrink 10.6% (vs -8.2% seen in May), while Germany’s GDP will probably drop by 6.3% (vs -6.5% seen in May). The Euro Area economy contracted by 3.1% from a year earlier in the first quarter of 2020.
  • On Tuesday: European stocks fell in cautious trade amid concerns that the economic recovery in the U.S. may be “leveling off” amid a recent surge in coronavirus infections. Asian stocks turned in a mixed performance on Tuesday as investors weighed a spike in coronavirus cases in some U.S. states and other parts of the world against further signs of economic recovery. US stocks moved significantly lower over the course of the trading session, giving back ground following the strong upward move seen in recent days. The Nasdaq reached a new record intraday high in morning trading but eventually joined the Dow and S&P 500 in negative territory.
  • Tuesday’s data below:

Disclaimer:  ‘Where the business has expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. The information contained within this communication is believed to be reliable but Realm Investment Management Limited does not warrant its completeness or accuracy. This communication is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell investments.