News / Analysis
Finance Update – Politix Knocking Markets FlatJune 18, 2020
Asia – The Sellout
Chinese benchmarks this morning are mainly up, led by the A50 (FTSE) with 0.55%. The Hang Seng is down a 1/3% and the Nikkei -0.46%.
The Aussie is down a quarter percent on a disappointing increase in unemployment, 7.1% in May – a 19-year high, with a 1% drop in the participation rate.
While relations go to pot, Chinese and US foreign ministers met yesterday in Hawaii – the former demanding the US stop interfering on Hong Kong and Taiwan matters while the latter focused on the need for trade reciprocity. S. Korea’s Yonhap news agency reports that northern troops have re-entered the demilitarised zone.
Americas – The Reckoning
US Trade Rep Lighthizer yesterday announced $10bn in cotton purchases by China.
Meanwhile, thwarted from targeting intractable social media, US President D. Trump’s Justice Department suggested yesterday curbs on big tech platforms in general – holding them responsible for criminal content. Another Republican bill would open tech companies to lawsuits regarding free speech censorship.
US indices were mixed yesterday, the DOW losing 0.65%, and the Nasdaq gaining 0.15%. The US dollar index lost another 16 cents overnight after disappointing construction data. Canada’s core CPI in May fell to 0.7% YoY.
Europe – The About-Face
European CPIs and Italian Industry data yesterday came in on par with expectations yesterday. Equities closed mainly up, the Swiss SMI leading with 1.16% despite a 1.1 bn franc trade surplus reduction, the CAC 0.88%, and the IBEX losing 0.22%.
British consumer inflation disappointed with a 3-tick drop YoY in May, while PPIs were up a tad YoY but nowhere near the -6% expected. Retail prices also contracted by a 1/10 percent.
While traders await this morning’s 3/4bn pound policy decision from the BoE, Brexit dealings took a step backwards as EC Pres von der Leyen said any deal would be subject to “level playing field” requirements.
Commodities – Shale’s Back
WTI is down 6 cents after last night’s worse-than-expected 1.2mB EIA build. Reuters reports that US shale companies have decided to boost production by a ½ million barrels per day.
Corporate – Google in Trouble
Google shares were up 0.42% yesterday but closed in a down-tick after news of new malicious Chrome addons spread.
PepsiCo gained 9 cents over the session after announcing it was discontinuing its Aunt Jemima brand for endorsing racial stereotypes.
And despite closing 5 cents up yesterday, Hertz shares recorded a 25 cent drop in prices after the SEC expressed issues with the company’s post-bankruptcy sale of a half-billion dollars’ worth of new shares, plans that the company promptly halted.
Finally, BP closed down 2% after announcing the sale of $12 bn worth of hybrid bonds – the maximum it could raise without harming its credit rating.
|07:30 AM GMT||Switzerland||Interest rate & monetary policy|
|11:00 AM GMT||UK||Interest rate & policy. Retail sales tomorrow morning at 6.|
|12:30 PM GMT||US||Jobless claims|
|12:30 PM GMT||Canada||Wholesale sales, employment change & housing price index|
|11:30 PM GMT||Japan||CPIs & monetary policy meeting minutes|