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Finance Update – Covid 2.0 in China?


Asia – Fears push down regional equities

Fears of a COVID-19 resurgence in China plus disappointing data there this morning has Asian markets severely down this morning, led by the Kospi’s 3.8% loss followed by the Nikkei’s -3%.

Only the Shenzhen Composite seems to be coming up for air with a 0.17% increase. At present, 10 Beijing neighbourhoods are under lockdown.

Retail sales in China lost a 1/3 of April’s data with a 2.8% contraction while industrial production increased by 4.4% – a half percent less than hoped for.

The real estate market is picking up, with investments up 8.1% in May, based on a Reuters report.

Japan’s PM Abe told Parliament this morning that he would resume economic reforms only after deflation was vanquished. Continued debt, however, had its limits, he said.

Europe – Mr. Johnson telephoning Brussels

Industrial output in Italy contracted by a better-than-expected 19% MoM in April while production throughout the EU contracted by 17% MoM – again, better than the expected -20%.

May’s CPIs also came in better than expected in France (0.2% MoM) and Portugal – 0%. As UK PM Johnson launches video negotiations with the EU, UK data – in line with Brexit talks expectations – generally disappointed with a 24.3% contraction for April’s industrial production and a 20.4% contraction in April’s GDP (MoM).

The nation’s non-EU trade deficit, on the other hand, narrowed to £2.66 bn, Die Welt this morning reports that Germany has agreed to increase its contribution to the EU budget by 42%.

Indexes on Friday closed generally up led by the AEX’s 0.91% increase, while the DAX lost 0.18%.

Americas – 25k new COVID cases on Saturday quash futures

US indexes managed to redeem themselves upon closing Friday, the Dow up 1.9%, and the Nasdaq up 1.01%.

Futures this morning, however, have already doubled that in losses with the Dow down 3.11% and the Nasdaq down 2.11%, as over 25000 new COVID cases were reported over the weekend, primarily due to continued riots throughout the nation.

Data as the week ended was mixed, May’s producer price index down a better-than-expected 0.8% (YoY) in May but continuing jobless claims losing half the expected to land at 20.92mn claims.

Dallas Fed head Kaplan told CBS yesterday he expects unemployment to end the year above 8%. In initial number, however, improved to 1.54mn claims.

Import prices were green with a 1% increase, but export prices were red with a mere ½ percent improvement, while the preliminary Michigan consumer sentiment index showed a vast improvement for June – 78.9 points.

Commodities – Oil down on resurgence fears

Oil was down 4.6% at the end of the Asian session despite Friday’s 7-rig deduction, based on Baker Hughes’ data.

Corporate – Hertz ignoring reality

Hertz shares added 37.38% on closing after gaining permission to sell up to $1 bn in shares despite bankruptcy proceedings, bringing its 1-day increase to 250%, or $2.83 – still nowhere near its pre-COVID high of $20.29 or its 2014 $107 record. Kellogg’s ($63.59 -0.28%) pays dividends later today.


08:00 AM GMT Italy CPIs
09:00 AM GMT EU Trade Balance
12:30 PM GMT US Empire State Manufacturing Index.
09:00 PM GMT NZ Consumer Confidence, House prices and inflation gauge at 2 AM (+1)
01:30 AM GMT (+1) Australia RBA Meeting Minutes & House Prices
03:00 AM GMT (+1) Japan Interest rates & policy.
06:00 AM GMT (+1) UK Unemployment, Earnings & Claimant Count

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