News / Analysis
Finance Update – The Age of ProvisionJuly 21, 2020
Asia – Australia extends wage subsidies
Asian indexes were led up overnight by the S&P/ASX (2.43%) followed by New Zealand’s DJ (+2.21%) and the Hang Seng (+2.02$). Action on the mainland was muted, with the A50 actually losing a tenth of a per cent.
Japan’s CPIs remained level in June at 0.1%, while credit card spending in New Zealand improved to -9.2%. And, in Australia, PM Scott Morrison has announced a $16.8 bn extension to its wage subsidy plan.
Europe – Leaders accept stimulus plan
Early this morning, EU leaders reached a deal on their €750 bn stimulus plan, of which 390 will be in non-repayable grants, according to Reuters. The night before, ECB VP De Guindos told reporters that the zone’s drop in Q2 GDP could be lower than expected.
Lacking much economic data, European indices yesterday added up to a per cent (Italy’s MIB) with only the FTSE losing half a per cent. Germany’s PPI lost 1.8% YoY in June and the zone’s Current Accounts in May show a €10.51 bn deficit.
And BoE Chief Economist Andy Haldane yesterday said that the bank’s policy committee sees no objection in principle to enacting negative interest rates.
Americas – Government adds 11 Chinese firms to blacklist
The financial world was optimistic across the board, US markets continuing to disregard the stricken economy. The Nasdaq yesterday gaining a further 2.51%, while yields on the 3 & 6-month bonds were down to 12 and 13%, respectively, from 0.145.
Early data quoted by Reuters from 3 different COVID-19 vaccines show positive immunity responses with no apparent side-effects. The drugs will now proceed to 3rd phase testing on larger groups of human subjects.
And on the trade war front, the US Commerce Dept has added another 11 companies to its sanctions list for their alleged part in human rights violations – especially China’s treatment of its Muslim population.
One company, Nanchang O-Film Tech, allegedly uses slave labour to supply Apple with iPhone components, as well as Amazon and Microsoft. Another, Changji Esquel Textile Co, is an alleged supplier to Ralph Lauren, Hugo Boss and Tommy Hilfiger.
Commodities – Cryptos receive approval from Mastercard & Thailand
Ahead of tonight’s API report, both Oil continues sideways just above the $40 mark as it and Gold overnight added 0.17%.
Meanwhile, Bitcoin is up 0.04% after the Bank of Thailand confirmed it has already started using CBDC, a central bank-backed digital currency for some corporate transactions. BOT Dep. Gov. Vachira Arromdee told Coinbase that the government was considering providing access to the general public, despite possible disruptions to the banking sector.
Adding to the optimism, Mastercard yesterday announced it was expanding its crypto programme, revealing that it had signed a deal with crypto-platform Wirex.
Corporate – Moderna crashes on Brit rival
Moderna yesterday crashed after Oxford University released results of its AstraZeneca partner drug showed positive results – indicating they may beat Moderna to the market.
IBM shot up 6% to $135 after hours yesterday before tapering off towards 132 after beating quarterly earnings estimates, primarily on an increase in cloud traffic. EPS at 2.18 beat expectations by 11 cents despite a 5.4% drop in revenues YoY.
Halliburton added 2.52% despite missing expectations on revenues, which plunged 46% YoY to $3.2 bn for the quarter, increasing the loss per share to $1.91. The share had gapped 40 cents up upon opening, peaking at 14.07 before the announcement before losing most of the day’s gains.
Today, expect earnings from Coca Cola, Philip Morris, Lockheed Martin, Prologis, Capital One, Paccar and Randstad. Dollar General pays dividends, and Constellation Brands will hold a shareholders’ meeting.
|08:30 AM GMT||UK||Public Sector Borrowing|
|12:30 PM GMT||US||Chicago Fed Activity Index. Redbook Index at 12:55.|
|12:30 PM GMT||Canada||Retail Sales & New Housing Prices|
|08:30 PM GMT||OIL||API Weekly Crude Oil Inventories|
|00:30 AM GMT (+1)||Australia||Leading Index & Retail Sales|