News / Analysis
Finance Update – Techs on TrialJuly 30, 2020
After Trump’s announcement that he would not defend its European allies from an attack by Russia, prompting his former communications director Anthony Scaramucci to call the president a racist KGB agent, the Dollar index this morning is at a 2-year low.
Also, yesterday, the US Fed left interest rates at 0.25%, saying the “path of the economy will depend significantly on the course of the virus.”
Indexes closed up led by the Russel’s 2.03% increase, even as Reuters reports the economy’s largest quarterly contraction since the Great Depression – a Q2 34% annualised drop in GDP, with COVID-19 destroying consumer and business spending and “potentially wiping out more than five years of growth.”
Pending home sales in June surprised to the upside by 6.3% MoM and the Goods Trade Deficit narrowed to $70 bn. Wholesales inventories, on the other hand, widened to -2% and July’s Mortgage applications decreased by 0.8%, following June’s 4% increase.
The Nikkei and Chinese benchmarks are slightly down this morning with the Hang Seng up 0.8% and New Zealand’s DJ 1.06% – the last despite July business confidence in New Zealand, which contracted to -31.8.
Building permits in Australia also failed to hit the mark contracting by 4.9% MoM in June despite hopes for a level 0.
In Japan, the Nikkei was unimpressed with June’s impressive 13% improvement in seasonally adjusted Retail trade, as foreign investments in stocks decreased by 110 bn Yen and bonds by half a trillion.
Reuters reports this morning a 30% drop in Hong Kong construction values over the past year and the start of a wave of defaults, causing consternation amongst lenders.
European indices remained red yesterday, save the CAC, which was up 2/3 of a per cent and the FTSE’s meagre 0.04% rise.
Net lending in the UK was surprisingly up by £1.8 bn and consumer credit nearly expanding at a much-better-than-expected £-0.086 bn in June and Mortgage applications by 40K, all nudging the pound up by 0.08%.
Reuters also reports that the defunct UK auto industry reported its lowest production level since 1954.
Oil continues in a bearish wedge towards 41.20 despite a monolithic 10 mB drawdown reported yesterday by the EIA.
Meanwhile, gold at 1974 continues to surge upwards, and Bitcoin is calmly holding on to its latest 11K foothold.
The Big-4 techs yesterday did poorly at their congressional anti-trust hearing, none even trying to forcefully rebut accusations of monopolistic and user-data mining activities.
Not surprisingly, Facebook closed up 1.38%, Google 1.32%, Amazon 1.11% and Apple a whopping 1.92%. Highlights include Bezos’s admission that his company may have used 3rd-party seller data for its own benefit and that stolen goods were indeed sold on the platform, and Zuckerberg’s failure to deny that it had copied, cloned and co-opted competitors. Ironically, the only FAANG not to appear at the trial was Netflix, which lost 0.82% during the session.
Kodak share trading was temporarily halted yesterday when shares soared by over 169% on the announcement the veteran camera-making company would begin making pharmaceutical ingredients for the US government.
Across the Atlantic, Airbus (-2.62%) announced production cuts amidst a 55% drop in revenues YoY to €8.32 bn, pushing EPS down to €1.42. Meanwhile, Boeing (-2.32%) announced it would end production of its 747 in 2022, amidst a 25% drop in revenues to $11.8 bn.
GE (-4.35%) revenues fell by 24% YoY, GM (-1.67%) by 53% Rio Tinto (+0.93%) by 13.7% and Qualcomm (+1.73%) 49%. Om the other edge of the scale, PayPal (+4.73%) reported an 11% increase YoY.
Today’s earnings reports are expected from Apple, Amazon, Comcast, Volkswagen, Baxter, Alexion, Stryker, Anglo American, American Tower, Danone, Orange, Textron, Valero, Fresenius and Davita. Ralph Lauren will hold a shareholder’s meeting.
|07:55 AM GMT||Germany||Unemployment. GDP at 8 and CPIs at 12 noon|
|09:00 AM GMT||EU||Business, Economy, Industry, Consumer & Services sentiment|
|12:30 PM GMT||US||GDP, Jobless Claims, and Personal Consumption|
|10:00 PM GMT||NZ||Consumer Confidence.|
|11:30 PM GMT||Japan||Unemployment & Industrial Production. Housing & Construction at 5 AM (+1)|
|01:00 AM GMT (+1)||China||PMIs|
|01:30 AM GMT||Australia||Private Credit & PPIs|