News / Analysis
Finance Update – Techs on TrialJuly 30, 2020
Americas – FED stays pat
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 interestThe cost of accessing money not owned. 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 DeficitA trade balance that is negative as a result of cost (imports, on the national level) being greater ... 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.
Asia – HK construction threatens lenders
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.
Europe – UK cars hit 60-yr low
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.
Commodities – Oil ignores huge drawdown
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.
Corporate – Tech lords admit wrongdoing – shares soar!
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 GMTGreenwich Mean Time (usually equals UTC – Universal Coordinated Time). GMT is a time zone, while U... (+1)||China||PMIs|
|01:30 AM GMT||Australia||Private Credit & PPIs|
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