News / Analysis
Finance Update – Trump Takes on 2nd FrontMay 28, 2020
Sentiment data from New Zealand overnight improved dramatically, the ANZ’s business activity index up 25 points to 41.8 in May, giving the NZD an0.16% push.
In general, Asian indexes are in the red this morning as contagion spreads to New Zealand (-1.64%) and Taiwan (-0.57%%).
Australian equities added 1.39% and the Nikkei – 1.72%.
The Hang Seng is down 1.67% as China deploys riot police throughout Hong Kong overnight, where over 1,300 US companies are deployed.
Not surprisingly, Reuters this morning reports that those same US businesses are warning President Trump to tread cautiously in sanctioning China before cancelling HK’s special status.
In separate news, the US Dept of Trade will uphold its ban on Chinese solar panels, despite a World Trade ruling to the contrary.
The US dollar index yesterday added nearly 60 cents on the dollar after mortgage applications rose by 2.7% in May, returning the previous month’s minus 2.6 the month before.
Not helping matters was St Louis Fed head Bullard who said he doesn’t expect interest rates to rise in the near future as Q2 eco data is set to deteriorate.
The Redbook index also improved, contracting by half the March reading, and the Richmond Fed’s manufacturing index rose to -27.
Unfortunately, the dollar lost all its gains as the session continued. Indexes continued improving – the DOW by 2.21%.
Ahead of tonight’s employment data, government layoffs have reportedly contributed more than their fair share to the dismal figures.
Yesterday’s Beige Book reports continuing employment pressure in all sectors.
Meanwhile, the UK’s Recruitment & Employment Confederation’s Business Confidence index improved from -21 points to -10 in April as May employment figures show a marked improvement.
BoE Gov. Andrew Bailey told reporters yesterday that he expects the economic recovery to be faster than expected and reiterated the possibility of negative interest rates.
European indexes yesterday were mostly up by about a percent and a half, save Holland’s AEX, which lost 0.44% and Switzerland’s SMI, -1.16%.
And, as UK PM Johnson prepares to depart for Brexit talks in Brussels, an Ernst & Young survey this morning indicates that France has overtaken both Germany and the UK as the favoured destination for international investments in the EU.
With Russia’s commitment to crude oil production cuts questioned, oil plummeted back to $31.57 per barrel last night after the API reported an 8.7-million-barrel increase in stocks.
OPEC+ is slated to meet on June 9th, after Putin and Salman yesterday issued a joint statement expressing their willingness to “exchange views.”
Facebook shares were down 1.32% and Twitter 2.36% as US President Trump prepares to sign an executive order censoring social networks after Twitter flagged a presidential tweet on online voting as questionable. The company’s CEO Jack Dorsey said they would continue to fact-check the president’s tweets, regardless.
Boeing shares, on the other hand, were up 3.4% after the 737 MAX production line went back into service, while Zoom is down 1.24% as workers return to their offices.
HP yesterday also added a third percent despite an 11.2% drop in revenues (YoY). Earnings, however, increased 3.9% YoY to 53 cents per share.
Finally, look out for COSTCO quarterly earnings after today’s NY session as shopping habits turn once more. Expect earnings at $1.86, down from $2.10 last quarter, on revenues of $36.66 bn – down from $39.07.
|07:00 & 12:00 AM GMT||Spain & Germany||CPIs|
|08:00 & 09:00 AM GMT||Italy & EU||Consumer & Business Confidence|
|12:30 PM GMT||US||Durable Goods, Jobless Claims & (prel) GDP. Pending Home Sales at 2|
|03:00 PM GMT||OIL||EIA Crude Oil Stocks Change|
|09:00 PM GMT||NZ||Consumer Confidence|
|11:30 PM GMT||Japan||CPIs, retail trade & industrial production. Housing starts & consumer confidence at 5 AM|