Stocks lower today as EU meeting extends

Stocks lower today as EU meeting extends 150 150 Realm

EU leaders enter a fourth day of meeting after failing to agree on the size and make up of a coronavirus recovery fund for the region. Negotiations are continuing in London today regarding the UK’s withdrawal from the EU and in the US there are a number of major companies, including Tesla, reporting quarterly earnings today.

 

Global Macro

  • The coronavirus will continue to dominate the headlines as well as the second-quarter earnings season, with companies such as IBM, Microsoft, Tesla and Twitter reporting their results. Elsewhere, flash PMI surveys for the US, UK, Eurozone, Japan and Australia will be keenly watched, while central banks in China, Russia, Turkey and South Africa will be deciding on monetary policy. Other key data to follow include: US existing and new home sales; UK retail trade, business and consumer morale; Eurozone consumer confidence; Japan trade balance and inflation; and South Korea Q1 GDP figures.
  • The Federal Reserve expanded its Main Street Lending Program to provide greater access to credit for nonprofit organizations such as educational institutions, hospitals, and social service organizations that were in sound financial condition prior to the pandemic. “Nonprofits provide vital services across the country and employ millions of Americans,” Fed Chair Powell said. The minimum employment threshold for nonprofits was lowered from 50 employees to 10, the limit on donation-based funding was eased, and several financial eligibility criteria were adjusted to accommodate a wider range of nonprofit operating models. The Federal Reserve left the target range for its federal funds rate unchanged at 0-0.25% on June 10th 2020 as expected.
  • The University of Michigan’s consumer sentiment for the US fell to 73.2 in July of 2020 from 78.1 in June, well below market forecasts of 79, due to the widespread resurgence of the coronavirus, preliminary estimates showed. The current conditions subindex declined to 84.2 from 87.1 and the expectations one to 66.2 from 72.3. Inflation expectations for the year ahead edged up to 3.1% from 3% and those for the next 5 years increased to 2.7% from 2.5%. “Following the steepest two-month decline on record, it is not surprising that consumers need some time to reassess the likely economic impact from the coronavirus on their personal finances and on the overall economy.
  • The consumer price inflation in the Euro Area was confirmed at 0.3% year-on-year in June 2020, up from a four year low of 0.1% in the previous month. Main upward pressure came from services (1.2% vs 1.3% in May), non energy industrial goods (0.2%, the same as in May) and food, alcohol & tobacco (3.2% vs 3.4%). At the same time, energy prices fell at a softer pace (-9.3% vs -11.9%). The annual core inflation, which excludes volatile prices of energy, food, alcohol & tobacco and at which the ECB looks in its policy decisions, was also confirmed at 0.8%, down from 0.9% in the prior month. On a monthly basis, consumer prices increased 0.3%, reversing a 0.1% decline in May.
  • The business confidence indicator in Hong Kong went up to -11 in the third quarter of 2020 recovering slightly from -37 in the previous period which was the lowest since the first quarter of 2009, due to the coronavirus crisis. Despite the improvement, most respondents still expect their business situation to be worse than better.
  • The number of people infected with the coronavirus across the world rose surpassed 13.8 million, of which at least 590 thousand people have died, according to Johns Hopkins. In the US, the epicenter of the disease, the number of infections rose by more than 77 thousand to over 3.57 million. Brazil, the second-worst affected country in the world reported near 45 thousand new cases and India became the third country to reach 1 million infections after reporting over 35 thousand in the last 24 hours. Meantime, South Africa is now ranked as the sixth most affected country by the disease with more than 13 thousand new infections. Elsewhere, Mexico reported more 6.4 thousand, Peru 3.8 thousand, Iran 2.5 thousand and Chile over 2.4 thousand. In Europe, the UK added more than 600 cases. Pakistan is now the 11th most affected country with 259,999 covid-19 infections.
  • On Friday: European stocks fell as growing friction in U.S.-China relations as well as fears of a second wave of coronavirus infections dashed investor hopes for a revival of the global economy. Asian stocks ended mostly higher on Friday as optimism over additional economy-boosting measures in major countries outweighed concerns about rising coronavirus infections and worsening tensions between Washington and Beijing. US stocks Following the pullback seen in the previous session, stocks showed a lack of direction over the course of the trading day on Friday. The major averages spent the day bouncing back and forth across the unchanged line before closing mixed.
  • Thursday’s data below:

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