News / Analysis
Finance Update – Trade Deals: Dead or Alive?June 23, 2020
Asia – Japan to curb UK talks
Asian PMIs overnight came in much better than expected, to no remarkable effect on indices and currencies – the former taunting the zero line in China, while the Nikkei is up 0.85% and the Hang Seng – 1.07%.
Japan’s preliminary manufacturing number fell to 37.8 in June on expectations of 36.9, while in Australia, they expanded to a just below expansionary 49.8 from 44 the month before services and composite numbers there doubled to 53.2 and 52.6, respectively.
Worried over yoyo-Brexit talks between the EU and UK, Japan’s Foreign Minister, Taro Kono said yesterday it was limiting its trade talks with Britain to 6 weeks.
And, as his nation kicks off its week-longdog-meat festival, Chinese PM Li Keqiang said yesterday he hoped he could reach a comprehensive trade deal with the EU by the end of the year.
Europe – Ganging up on China
The EU joined a general anti-China chorus yesterday, warning against “very negative consequences” unless China opens up its economy and retract its new security laws in Hong Kong.
EC President Von Der Leyen said there had been no progress on trade talks with China.
Meanwhile, ECB Vice President De Guindos told reporters that the Eurozone’s economy was expected to rebound in the second half of this year despite plunging an expected 13% in that period.
European indices all closed in the red yesterday, the Swiss SMI down 1.12%.
The UK’s industrial trends survey showed an improvement in Jun to -58%, while consumer confidence throughout the Eurozone improved by 4 points to 14.7 (June’s preliminary reading).
Reuters reports that the car industry is demanding government aid to cope with COVID-spawned factory closures.
And Bloomberg reports that the EU has asked the World Trade Organization for permission to tax $11.2bn-worth of US products, including coal, aircraft parts, and farm/fishery products.
Americas – Navarro Upsets Markets
Markets were discombobulated yesterday after the White House and its trade adviser Peter Navarro retracted the latter’s assertion to Fox News that the Sino-US trade deal was “over”.
US indices improved marginally yesterday, the Nasdaq actually adding a percent point eleven on tech wonders, like Netflix (+3.16%), Google (+1.83%), and Amazon (+1.45%).
Existing home sales in May disappointed with a 9.7% contraction to 3.91 million units (MoM) – a 10-year low.
Boston Fed head Eric Rosengren told Yahoo Finance yesterday that the second half of the year would be more difficult than anticipated.
Commodities – China Buying Gold Miners
Oil edged over the $41 mark yesterday before returning half its gains on the US-China trade row.
And Gold tried once more to break the 1770 resistance level yesterday, as ZeroHedge reports Chinese gold companies in a buying splurge of mining companies around the world.
Corporate – PayPal to Enable Cryptos
Apple closed up 2.62% yesterday after announcing it would shift to self-production for its Mac computer central processors, now manufactured by Intel. Intel closed erratically up 0.79% for the day.
PayPal closed up 3.59% after the announcement that it would be enabling its 325mn users to buy and sell cryptos directly on its platform.
Finally, Aurora closed up 2.09% after Bloomberg reported yesterday that sales across the Americas had been doubling during the lockdown.
|7:15 AM-1:45 PM GMT||France, Germany, EU, UK & US||Comp. Svcs & Mfg PMIs|
|02:00 PM GMT||US||New Home Sales|
|08:30 PM GMT||OIL||API Weekly Crude Oil Inventories|
|11:50 PM GMT||Japan||Corporate Service Price Index. Coincidental & Leading indexes at 5 AM (+1)|
|02:00 AM GMT (+1)||NZ||Interest rate & statement|