News / Analysis
Finance Update – HK Security laws go Into EffectJuly 1, 2020
Asia – Taiwan Opens HK Immigration Office
Indices throughout Asia are mainly up, this morning, led by the FTSE’s China A50 (+2.02%). The Hang Seng is up a ½ percent, but the Nikkei is down 0.9%.
At 28.4, Consumer confidence in Japan improved in June by 4 points. However, Reuters reports a 23% drop in car sales in June YoY.
Chinese manufacturing entered expansionary numbers – 51.2, according to Caixin data, despite increasing job cuts and weakening exports.
The PBoC this morning announced that it expects consumer inflation to ease, but not to the point of deflation.
Meanwhile, Taiwan has opened an office to help Hong Kong residents escape the new Chinese security law, which came into effect yesterday.
The law enables China to prosecute Hong Kong residents with secession, subversion, terrorism and collusion with foreign forces – all life-term sentences.
Australia’s CommBank manufacturing PMI also crossed into expansionary territory in June – 41.2, but building permits contracted by 16.4%.
Europe – UK Marks Worst GDP in 40 Years
European indices closed mostly in the red yesterday, Belgium and the Eurostoxx up by 0.05% and the DAX managing to bring home a 0.64% gain.
The FTSE’s 0.9% drop was ‘helped’ by construction equities after the central bank delivered a record low in mortgage approvals.
National data continues to disappoint, GDP contracting by 2.2% in Q1 – leading to its worst yearly performance in 40 years, and the current account doubling to a £21.1 bn deficit but business investments expanding by a pleasing 0.8%.
This morning, June house prices saw a 1.4% reduction MoM.
Other European data yesterday came in mixed, French consumer spending up by 36.6% after April’s 19% contraction, but producer inflation in June down to 0.1% YoY. While this morning’s retail sales for Germany saw a dramatic improvement to 13.9% MoM.
Italy’s preliminary CPI for June finally in positive territory at 0.1% MoM, the PPI improved to -0.1% YoY and the EU’s CPI figure is at 0.3%.
Americas – COVID-Ridden US Flights Banned in EU
The new NAFTA deal comes into effect today amidst US threats to tax aluminium.
As US coronavirus cases spike by a record 47K in a single day and deaths by 1.2K, US indices recouped some more losses yesterday, the Nasdaq up by 1.87%, but the Dow by 0.85%.
Banks were among the prime motivators, as Goldman Sachs, Citigroup, Morgan Stanley, Bank of America and JPMorgan all announced they would be paying regular dividends. Only Wells Fargo said it would cut dividends after the FED’s stress tests restricted dividend payments and buybacks.
House prices increased by a better-than-expected 4% in April (YoY) while the Chicago PMI for June missed expectations at 36.6.
Meanwhile, the EU has excluded the US from its list of safe countries from which it will allow flights to land throughout the area.
Commodities – Sharp API Decline Pushes Oil
Oil this morning is at the top of a gradually developing pennant after adding a percent and a quarter overnight. It’s now at $39.77 for a barrel of WTI, largely thanks to an 8.16 mB drawdown, based on API data from last night.
Gold yesterday shot $20 up through the 1800 point as Chinese buying continues unabated.
Corporate – Macy’s Quarterly Today
The EU yesterday rejected a UK proposal to cut the trading day by 90 minutes. Hours throughout the Eurozone will remain 9 to 5:30 local time.
Airbus was up 0.27% after announcing overnight it would cut 15,000 jobs worldwide on a 40% drop in demand.
Boeing shares were up 14% yesterday after 737MAX test flights resumed, while Dun & Bradstreet yesterday raised $1.7 bn in its first public shares offering – far beyond expectations.
FedEx was up 4.21% yesterday after announcing a 2% drop in revenues YoY, EPS at $1.41.
Coca Cola (+0.72%), Viacom (-0.51%) and Nike (+2.27%) today pay dividends; and Macy’s (+3.93%) will publish its quarterly earnings before US markets open. Expect a $2.50 loss per share on $3.72 bn revenues.
|7 AM – 1:45 PM GMT||Spain, Italy, France, Germany, EU, UK & US||Markit Manufacturing PMIs|
|07:55 AM GMT||Germany||Unemployment|
|12:15 PM GMT||US||ADP Employment Change. ISM Mfg PMI and Construction Spending at 14:00. FOMC Minutes at 18:00 and Vehicle Sales at 19:30.|
|02:30 PM GMT||OIL||Crude Oil stocks change|
|11:00 PM GMT||UK||Consumer Confidence|
|11:50 PM GMT||Japan||Foreign Investments & Monetary Base|
|01:30 AM GMT (+1)||Australia||Trade balance|