News / Analysis
Finance Update – Chinese Indices Cast No DoubtJuly 22, 2020
Asia – Chinese remedy enters Phase 3
Asian benchmarks are positive this morning as China’s Sinovac Corona vaccine enters phase-3 trials in Brazil, where Astra Zeneca’s vaccine is also being tested.
Adding to the elation, President Xi Jinping announced that the government would reduce taxes and fees for businesses to help prod the economy.
China continued up overnight led by the Shenzhen Composite’s 1.62%. Both the Nikkei and the Hang Seng drew down alongside New Zealand and Australia, the latter registering a 1.37% loss.
In Australia, retail sales fell to 2.4% in June from 16.9% the month before, while in Japan, Jibun bank published an extremely uplifting manufacturing PMI – 42, up 2 points from June but still contractionary. A Reuters poll has 13 economists saying that the nation’s industrial sector could be emerging from its COVID-induced slump.
Europe – Pessimism on the Brexit front
European indexes closed marginally up yesterday, the DAX leading with 0.96%, the FTSE holding the rear at 0.13%.
The pound is down a quarter per cent as the Telegraph this morning reports that Britain and the EU do not expect to finalize a trade deal by deadline’s end this month, citing continued differences vis-à-vis fishing right’s level-playing-field requirements and the deal’s governance.
Americas – Stimulus doubt topples dollar
The Nasdaq continued south yesterday losing 0.8%, while the DOW added 0.6%. The dollar performed a 73 cent dead-cat’s bounce yesterday after doubts arose for the proposed US stimulus deal.
The Chicago Fed’s national activity index yesterday shows a 1-point increase to 4.11, but the Redbook index fell to -7.5 for the week of July 17th.
Data from Canada missed expectations, retail sales increasing nicely to 10.6% MoM growth and the housing price index up 2 ticks to 1,3% YoY – all resulting in a minuscule 0.05% drop in the Loonie.
Commodities – Huge inventory pressures oil
Oil overnight fell by a dollar a barrel to 41.50, losing half the day’s gains after the API revealed a 7.54 mB increase in crude inventories.
Gold gained an impressive 0.82% overnight, pushing it to $1858.30 per troy ounce on dollar weakness, as doubts begin to circle over the US economy.
Corporate – Cheap China Teslas nudge deliveries
Boeing was up 2.41% yesterday despite an FAA announcement that its 737MAX would probably remain grounded In earnings, most shares were up on better-than-expected, though grim results.
Snapchat yesterday lost 2.1% despite revealing a 17% increase in revenues but a 23-cent loss in earnings per share due to a 28% jump in net losses – primarily on operating cost increases.
Coca Cola added 2.34% showing a 28% drop in revenues and a 32% plunge in EPS to 42 cents. Philip Morris added 4.16% after showing a 13.6% drop in revenues. And Lockheed Martin rose 2.62% thanks to a 12% increase in revenues and a 15.8% increase in earnings.
Tesla reports earnings today alongside Microsoft, Iberdrola, CSX, Biogen, Chipotle, Akzo Nobel, Northern Trust, Dover and Whirlpool. The company is reportedly cutting prices in China to meet quarterly delivery goals, according to GLJ Research. The company has denied the charge, but not vehemently enough, shares dropping 4.54% yesterday, erasing half the previous day’s gains.
Agilent, Comcast will be paying dividends today, and Experian will be holding a shareholders meeting.
|11:00 AM GMT||US||Mortgage Applications. House price index at 1 and home sales at 2.|
|12:30 PM GMT||Canada||CPIs|
|02:30 PM GMT||OIL||EIA Crude Oil Stocks Change|
|11:50 PM GMT||Japan||Foreign Investments|
|01:30 AM GMT (+1)||Australia||Business Confidence|
|06:00 AM GMT||Germany||Consumer Confidence|