News / Analysis
Finance Update – Twitter StingsJuly 16, 2020
Asia – Markets down despite Chinese data
It’s red across the board this morning in Asia, the Nikkei down 0.83%, the Hang Seng down 1.29% and the Shenzhen Composite down 3.23%%.
China’s GDP in Q2 expanded by a surprising 11.5% QoQ with industrial production up 4.8%, but retail sales only improving to -1.8%.
Australia’s consumer inflation fell unexpectedly to 3.2% in July, against expectations of a 3.8% improvement. Unemployment increased to 7.4% – a 22-year high, but the participation rate improved to 64% in June.
Europe – IMF – 20% SMEs to go bankrupt
With the ECB’s monetary policy meeting up ahead today, European indices yesterday performed strongly, the CAC40 up 2.03% and others close behind.
In the UK, 200 top finance experts are meeting today to propose initiatives aimed at assisting small business owners repay about £35 bn in relief debt after the government’s scheme ends in Autumn. One suggestion is the launching of a UK Recovery Corporation, which would administer government-backed loans.
Unemployment, this morning in the UK, pleasingly maintained its 3.9% level in May, claimants falling by 28% and earnings (excluding bonuses) increasing by 0.7%.
Bloomberg this morning publishes an IMF report suggesting that up to 12% of SMEs may go bankrupt this year – triple the normal rate – without tax and social security contribution relief. The rate could be as high as 20% in the services sector.
Americas – Indices & earnings part ways
With Kanye West scrapping his presidential bid and index futures falling, US markets closed up to the tune of 0.91% for the S&P, 3.95% for the Russel 2000.
Yesterday’s data exceeded expectations, the Empire State Manufacturing Index up to 17.2 in June, import and export prices increasing by 1.4% and 10.7%, respectively.
In Canada, interest rates were maintained at 0.25%. The central bank plans to continue its weekly $5bn assets purchase plan, still targeting a 2% inflation rate.
Commodities – Mexico departs
Oil yesterday performed a perfect double bottom upon the EIA’s confirmation of a 7.5mB drawdown, nevertheless losing 40 cents on the barrel throughout the session.
While major oil companies yesterday announced an agreement on greenhouse gas emissions, OPEC+ members – now minus Mexico – also agreed to relax production quotas, offsetting the EIA’s report.
Corporate – Free advertising on select sites
Adult site Pornhub this morning announced it would offer free advertising for small businesses (under 100 employees) hit by the Coronavirus.
Meanwhile, Twitter (+3.75%) has regained most of its losses from Wednesday’s Bitcoin (-0.45%) attack in which prominent accounts (Netanyahu, Obama, Bezos, Musk) were hacked in what is suspected to be an internal security breach against Twitter itself.
Apple closed up 0.69% after winning its tax case in Europe yesterday. An EU court has rejected the commission’s order that the company pay more than $15bn in back-taxes.
Tesla shares closed up 1.93% despite reporting a halving in California sales for the past quarter.
And MP Materials – a US rare earth mining company – is expected to go public, after Donald Trump began a push to resume local rare earth production as a result of Chinese threats to cease exporting the material to the US. The company will still need to process the raw product in China for the time being, however.
Yesterday, Goldman Sachs published a 5% drop YoY in earnings to $6.26 per share on a 41% increase YoY in revenues to $13.3 bn. Ahead today, quarterly earnings reports from Bank of America, Morgan Stanley, Netflix, Abbot Labs, J&J, and Telenor. Danone will be paying dividends.
|09:00 AM GMT||EU||Trade Balance. Interest rate & ECB policy at 11:45. All follows French CPIs at 7 & Italy’s trade balance at 8.|
|12:30 PM GMT||US||Jobless claims & Retail sales. Business inventories and Housing market index at 2.|
|10:30 PM GMT||NZ||Business PMIS|
|11:01 PM GMT||UK||Consumer Confidence.|