News / Analysis
Finance Update – Oil, Gold & Bitcoin Making WavesJuly 27, 2020
Asia – Chinese techs bite the bullet
Indexes across the world closed on Friday in a bath of red, the Shenzhen Composite down a stunning 5.31%. The Nikkei and NZ Dow emerged relatively unscathed at a half per cent loss, and the Tadawul only shed a hundredth of a per cent.
This morning, China managed to recoup a fraction of those losses, the Shenzhen up a quarter per cent, the Hang Seng up 0.05% but the Nikkei still down a third, after the Bank of Japan kept current interest rates but provided forward guidance expressing concern and relinquishing its 2% inflation target for the time being.
Chinese industrial profits reported by Reuters shows an 11.5% increase YoY in June, its first monthly increase in 8 months. The news-source also says, however, that major technology firms are beginning to face headwinds due to trade tensions which by now have spread from the US to the rest of the world. Besides multi-billion dollar losses for Huawei, other companies cited include ByteDance’s TikTok, Alibaba cuts in India, TenCent, drone-maker DJI and AI firms like Megvii, Sensetime and iFLytek.
Europe – PMIs promise upside
European indices were led south Friday by Holland’s AEX, which lost 2.21%, the Dax trailing it at -2.02%.
Consumer confidence for the EU in July lost 3 ticks and is currently at -15 for July. All PMIs exceeded expectations for the zone, as well as in France, Germany and the UK – all now well into expansionary territory. France’s 52 in manufacturing missed the mark, in fact falling from last month’s number.
Business confidence in Italy increased but not as much as expected, and consumer confidence in July decreased by ½ a point.
The pound is up 0.4% this morning after UK retail sales shot up beyond expectations to 13.9% in July. On Thursday, the British Confederation of British Industry on Thursday said industrial trends had declined by 46% for orders.
Americas – Manufacturing still down
US indices Friday saw the Russel2000 down by a per cent and a half, the Nasdaq by -0.96% and the DOW -0.68%.
The US Dollar is down 0.41% this morning after Thursday’s Initial Jobless Claims increased by 11.416m applications. The continuing figure welcomingly fell to 16.197 mn.
Additionally, Friday’s manufacturing and services preliminary PMIs for July missed the mark, climbing to an expansionary 51.3 for the former and 49.6 got the latter – but not enough. New Home sales exceeded expectations at 776K units.
Commodities – Bitcoin is money – Fed judge
WTI fell by 75 cents a barrel on Friday and continues on growing geopolitical concerns after the Baker Hughes company revealed the reopening of a single oil rig in the past week. Prices later recovered and are now steady at 41.25.
Reuters meanwhile reports that China’s crude imports of Saudi oil increased by 15% in June YoY and also from Brazil, Norway and Angola, prices down thanks to an ongoing price war between Saudi Arabia and Russia.
The biggest beneficiary from all the political commotion is, without doubt, gold which has broken through the multi-year high and is now trending up from $1900.30 per troy ounce to start the week at a dazzling 1926 as the US and Chinese consulates close, COVID 2.0 stirs up, markets assess their exposure to economic pandemonium and oil producers squabble.
Bitcoin slid past the 10K mark overnight after last week, a US Federal court rules that the crypto is money (as opposed to a commodity). Judge Beryl A Howell said that Bitcoin is a medium of exchange, a method of payment and a store of value, in a ruling against Larry Harmon, a platform operator who is under indictment for laundering money.
Corporate – Carrefour earnings
We swing into full gear this weak with earnings from Blackrock, Carrefour and Spains pharma giant, Grifols. Later this week, all major techs and more. Also, GE will be paying dividends.
Google (-0.56%), reporting on Thursday, is facing increasing scrutiny as Australia, too, joins the flood of regulators examining its misleading and expanded usage of personal data for targeted advertising.
|08:00 AM GMT||Germany||Business climate and expectations|
|12:30 PM GMT||US||Durable Goods. Dallas Fed Manufacturing Business Index at 2:30|
|10:45 PM GMT||NZ||Total Filled Jobs|
|11:50 PM GMT||Japan||Corporate Service Price Index|