BT shares leap as European equities trade higher

Still no love for Europe? Equity indices in Europe dropped last week as risk appetite waned into the weekend, whilst US stocks closed Friday at record highs, albeit the rally since the March lows has been very uneven – all the chatter over the weekend was about a K-shaped recovery.

Can beaten down value stocks catch up? With Europe lacking a lot of the high-quality tech and growth names, it may struggle until there is a vaccine, the pandemic is over, and dividends are reinstated. Short-term the price action in stock indices seems more down to the individual narrative of the day or week.

Stocks up as markets focus on Covid-19 treatment and vaccine news

Today it’s positive. European equities took the cue from a strong Asian session and pushed higher on Monday morning, with the narrative centring on treatment and vaccine news. Donald Trump is said to be mulling fast-tracking AstraZeneca’s vaccine candidate, whilst the FDA issued an emergency use authorisation for using plasma from recovered patients to treat Covid-19. Shares in AstraZeneca rose 2% in early trade.

Meanwhile, the US and EU have struck a ‘mini’ deal to cut tariffs on a range of items, which marks an important de-escalation of trade tensions that has dogged relations for many months.

BT surges as it readies takeover defence

BT shares leapt 7% after reports it is seeking to bolster its defences against a possible takeover. At a valuation of £10bn, the group has become a definite target. And whilst BT has a lot of legacy baggage – notably £18bn in net debt and a major pension deficit – it’s also got the Openreach crown jewel, which would be worth considerably more on its own than the group is valued today.

Of course, there is no formal offer, but shares could jump further if one emerges. Deutsche Telekom, which owns 12% in BT, is seen as a likely candidate. The question is whether there could be more bombed out UK-listed stocks that could be taken out by a timely takeover…perennial rumour-favourite ITV, for instance?

Deadlocked Brexit talks weigh on Sterling

Elsewhere, sterling made a push higher last week, but the dollar came back. Brexit talks did not go very well and there was virtually zero progress on some key elements. The failure to break the long-term weekly trend resistance makes GBPUSD susceptible to further pull backs, with a gravestone doji weekly candle also a bearish indicator. Support kicked in at 1.3060 on Friday and offers the near-term test for bears.

Bulls will require a weekly close above the trend line to be confident. EURUSD failed to overcome 1.1960 and pulled back to 1.1760 where it has found support. A further rise in EUR net long positions to almost 200k contracts evident in Friday’s COT report from the CFTC indicates extremely bullish positioning that may be too crowded and liable to a squeeze lower. GBP speculative positioning turned net long from net short for the first time since April.

What we’re watching this week:

Republican convention fires campaign starting pistol

The Democrats seem to have got through their set-piece without a hiccup. Now over to Trump and co for the Republican convention, which will not only mark the starting pistol for this year’s presidential run, but also the race for the 2024 GOP candidate. Market attention will increasingly come around to the November presidential race with barely over two months left until polling day.

Vix futures indicate investors are starting to position for more volatility as the election approaches and we should be prepared for a decent nudge higher in volatility and swing lower for stocks over the next two months. This is will be the last major set piece event before the first presidential debate on September 29th.

Jackson Hole

A confusion of central bankers convene in Wyoming online for the annual Jackson Hole Symposium. This year’s virtual theme is “Navigating the Decade Ahead: Implications for Monetary Policy”. I could answer that in one sentence: lower for longer, outright debt monetization, force inflation up to clear debts. But I’m not a central banker, although I would go to Jackson Hole for the trout fishing.

Federal Reserve chair Jay Powell speaks on Thursday just a few moments before the US cash equity on Wall Street. Bank of Canada Governor Tiff Macklem follows and Bank of England Governor Andrew Bailey speaks on the Friday. Given the way the minutes of the Fed’s July meeting rocked risk appetite and checked the bulls’ progress, this will offer a chance to catch up on where the Fed one month on with its mid-September FOMC meeting in focus.

Economic data to watch

There is a lot of economic data to get through this week, notably some Q2 GDP second estimates for the US among others. On Tuesday we are looking at the US CB consumer confidence report.  Wednesday sees the weekly crude oil inventories report as well as US durable goods orders and Australian construction activity. On Thursday the US weekly initial jobless claims number gets released, after last week’s disappointing print of 1.1m. Look also at the pending home sales and preliminary (second estimate) GDP numbers.

More US data rounds out the week on Friday with the Fed’s preferred inflation gauge, the core PCE price index; personal spending; University of Michigan consumer sentiment; and the Chicago PMI on the slate.

Earnings to watch

Ad titan WPP reports it interim results for the six months ended June 30th on Thursday. The advertising giant is a useful barometer of economic confidence. Big brands have slashed marketing budgets to cope with pandemic and WPP has warned of the hit it will take this year.

But rival Publicis reported a 13-% drop in second quarter like-for-like sales, which was well ahead of the –20% anticipated. Shares in WPP are down over 40% this year – could Publicis offer a clue as whether the stock may find a new course? Does WPP see ad spend picking up? How has the Facebook boycott impacted it?

We are also interested in recruiter Hays – which reports finals on Thursday and is often a great indicator as to the overall health of the labour market globally. Salesforce.com(CRM) is expected to deliver earnings and revenue growth when it reports numbers for the quarter ended July on Tuesday. EPS is seen at $0.7 on revenues of $4.9bn.

Don’t become immune to what’s going on

We all want a vaccine to Covid-19 to be made, but let’s not become immune to the bad data. It’s very easy to be inoculated against the collapse in economic activity because we’ve had nothing but bad news for 6 months; what you could term the ‘new normal’.

Just as we are at risk of sleepwalking into a lower level of existence, worse education outcomes for our children, persistently lower incomes and reduced social interactions against our will, it’s far too easy to watch the economic data and think it’s not so bad after all. The truth is it remains shocking and will get worse.

UK debt rises, Spanish firms teeter on the brink of collapse

UK debt has risen above £2 trillion, or 100.5% of GDP. This need not be a problem in itself – governments in control of their own currency don’t need to ‘pay it back’ by returning to austerity and raising taxes. One in eight UK workers remains on furlough. Meanwhile 25% of Spanish businesses are in a ‘technical bankruptcy’, it was reported this morning. Germany wants to furlough workers for years, which would lead to a lost generation of zombie employees working at zombie companies. It needn’t be this way.

Weakness in US labour market highlights recovery obstacles

It was a soft initial claims print from the US Department of Labor – over 1.1m vs the sub-one-million number expected, which highlights the lumpy nature of the recovery now that the easy wins are behind us. However, the number of continuing claims and the unemployment rate were better.

The advance seasonally adjusted insured unemployment rate was 10.2% for the week ending August 8th, a decrease of 0.4 percentage points from the previous week’s 10.6%. Continuing claims were down over 600k to 14.8m, which was a tad better than the 15m anticipated. Giving with one hand but taking away with the other, but jobless claims are still extraordinarily high.

Wall Street hooked on stimulus

Of course, stocks don’t really care much. The Federal Reserve has successfully killed off bear markets as comprehensively as the passenger pigeon. If we define a bear market as when the S&P 500 declines 20% from its previous peak and ends when it reaches a trough and then subsequently rises 20%, then the 2020 bear market was by far and away the shortest on record.

The FTSE 100, which is a much better proxy for economic growth than the US markets are, has languished and is struggling to hold onto the 6,000 level this morning. Indeed equity markets in Europe were mixed after a solid session in Asia. Wall Street was a little higher yesterday as investors continue to hold grimly to record highs.

Eurozone PMIs undershoot expectations

A slew of Eurozone PMIs disappointed. Confidence in France seemed a good deal weaker than expected. The Manufacturing PMI fell under 50, indicating businesses are less confident than they were the previous month. Rising Covid cases in Europe and worries about a big second wave were cited. Germany’s survey was more positive but still fell short of expectations. PMIs may show lots more confidence, or they may not. But as detailed in the week ahead, there is so much wrong with these diffusion indices that we should be paying too much attention to them.

European equity indices opened higher, dropped sharply after the French miss and recovered on the more robust German figures. The euro fell on the softer-than-forecast PMIs, while sterling was close to its recent highs after putting in a strong session yesterday afternoon and overnight in Asian trade. Cable was a little softer having risen as high as 1.32550.

Equity markets eye European Covid count, US postal ballots become electoral flash point

Dog days on animal farm: it’s a very quiet start to the session with European indices trading either side of the flatline in the first hour as traders eye the rise in coronavirus cases across the continent. Basic resources, healthcare and tech were higher, offsetting broad weakness in the rest of the market with travel stocks leading the losses.

Europe’s rising Covid-19 cases cause investor alarm

As noted in the week ahead, the number of new Covid-19 cases across Europe is the number one thing to watch in the coming days as it has the potential to send nascent economic recovery into reverse. Germany has extended travel warnings to nearly all of Spain, which while making it easier to grab a sun lounger is taking the shine off travel and leisure stocks again this morning. IAG and TUI both fell another 3-4%, with EasyJet down more than 2%.

A sharp rise in cases in Spain, France and Germany will make traders nervous about new lockdowns and ensure that local equity markets remain volatile. Nevertheless, basic resources stocks registered strong gains in early trade to offset much of the losses elsewhere.

US stocks tried many times but failed last week to notch a record intraday high, falling shy of the Feb 19th peak at 3,393.52 several times. The problem is that this is not a simple bull market, with the split between growth and value plain to see. All stock sectors are equal, but some are more equal than others.

US data mixed, stimulus talks going nowhere fast

Last week, US retail sales were soft, although ex-autos the number was better than expected. Unemployment claims fell below 1m for the first time. However a stimulus bill has not been discussed by Congress and with the end of the $600-a-week stimulus cheques, there may be a tougher time ahead for consumers and companies dependent on them – 70% of the US economy is consumer driven, so the loss of this additional income will be hard felt.

Unless a stimulus package is agreed, stock markets may need to take corrective action. Even if bears don’t take control, a pullback from the all-time high to consolidate gains before bulls mount a fresh drive higher should also be considered.

Asia moves higher despite cancelled US-China trade talks

Asian markets were broadly higher on Monday but shares in Tokyo fell 0.8% as figures showed Japan’s economy shrank by the most on record in the second quarter, declining 7.8%. This works out at -27.8% annualised, which makes it the sharpest downturn since 1980 when such records began. It’s also the third straight quarter of contraction. We also note that Tesla’s new registrations in China fell to 11,623 units in July, down from 15,529, which may indicate a slower rate of recovery in the world’s second largest economy.

US-China trade talks slated for Saturday did not happen with sources blaming scheduling conflicts and a desire to give China time to increase its purchase of US exports. Meanwhile, in Washington developments around the November election are starting to heat up. Speaker Nancy Pelosi has called on the House of Representatives from recess to vote on a bill to ‘protect’ the US Postal Service, accusing President Trump of a „campaign to sabotage the election“.

Election officials are worried about delays that could mean ballots are not counted – a huge amount of extra demand this year because of Covid-19. Donald Trump doesn’t trust mail-in voting and has previously said he would block additional funding for the USPS. In short, Covid-19 has created a vast amount of extra demand for postal ballots and the White House recognises these are more likely to be Democrat votes.

Meanwhile the Democrat convention gets underway on Monday and lasts until Thursday, marking the end of the phoney war and start of the campaign proper. Watch for a speech from Kamala Harris, the VP candidate, on Wednesday, with Joe Biden to speak on Thursday.

GBP/USD in focus as Brexit talks resume

Brexit talks resume this week and the European Commission fired the opening salvo in the exchange, with executive vice president Valdis Dombrovskis warning that the City will have to wait beyond the end of the year for equivalence. Talks between the UK and EU resume on Tuesday. Last week David Frost, the UK lead negotiator, said that a deal ‘can’ be reached in September, and that the UK was not interested in threatening the EU’s single market.

However he also reiterated that Britain would never compromise on the jurisdiction of the courts nor on fishing rights. There is significant headline risk for GBP this week as August rolls on. Nevertheless, hope springs eternal as far as sterling is concerned. GBPUSD was trading above 1.31 with the dollar offered across the board and the dollar index taking a 92 handle.

Stocks surge as Russia claims to have a Covid-19 vaccine

Stocks have leapt higher today after Russia claimed that it had registered the world’s first vaccine for the new coronavirus.

The Dow has climbed over 350 points higher and the S&P 500 has risen to within touching distance of the all-time high set in February. European stocks have held on to this morning’s gains.

Conversely, safe-haven precious metals are getting hammered, with gold now down over -4% at $1,940.00 and silver crashing -7% to $27.00.

Putin announces registration of world’s first coronavirus vaccine

President Putin claims that the virus works ‘quite effectively, it forms a stable immunity and, I repeat, has passed all the necessary checks’. He also said that one of his daughters has been given the vaccine.

The vaccine has undergone clinical trials, which have been completed in under two months. Phase three trials are expected to start on Wednesday and will involve countries including the United Arab Emirates, the Philippines, and Saudi Arabia.

The vaccine will be called ‘Sputnik V’ in overseas markets. The Russian Direct Investment Firm, Russia’s sovereign wealth fund, is backing the production of the vaccine and claims that over 20 countries have filed preliminary applications for a total of over 1 billion doses so far.

Doubts over Russian vaccine claims

While Putin has hailed the Russian breakthrough and stocks have moved sharply higher, the news has been met with scepticism elsewhere.

A spokesman for the World Health Organisation cautiously said that the body was in contact with Russia about the “possible pre-qualification process for a Covid-19 candidate vaccine which requires rigorous review”.

And former US Food and Drug Administration commissioner and Pfizer board member Dr Scott Gottlieb told CNBC today that, compared to the US efforts, Russia’s vaccine development is ‘certainly not ahead’.

‘They’ve cleared the equivalent, really, of a Phase 1 clinical trial in terms of putting it in 100 to maybe as many as 300 patients so it needs to be evaluated in a large-scale clinical trial,’ Gottlieb said.

Regardless of any cautious noises, markets are powering higher, with investors perhaps repricing their expectations for how far out a working vaccine is.

US Election, Recession, Brexit: What’s in store for markets in 2020 H2?

The first half of 2020 has been a wild ride. We’ve seen unprecedented moves in markets, historic stimulus efforts by both central banks and governments, and record-breaking data that grabbed headlines across the globe.

H1 has already brought plenty of drama, but what should we expect from the next two quarters? Join us for a recap of some of the biggest events in market history and a look at the risks and opportunities that lie ahead.

Coronavirus pandemic prompts worst quarter in decades for stocks

At the start of 2020 the main themes of the year looked to be the US Presidential Election, the trade war with China, and Brexit.

It seems like years ago that markets began to get jittery on fears that the handful of novel coronavirus cases in Wuhan, China, could become something ‘as bad as SARS’. It quickly became apparent that we were dealing with something much worse, and the market was quick to realise the full, brutal, reality of a global pandemic.

The panic reached its zenith towards the end of March. As the sell-off ran out of momentum global stock markets were left -21.3% lower. The S&P 500 had its worst quarter since 2008; the Dow dropped the most since 1987 and set a new record for the biggest single-day gain (2,117 points) and single-day loss (2,997 points). European stocks had their worst quarter since 2002, with a -23% drop in Q1.

Oil turns negative for first time in history after Saudi Arabia sparks price war

Things became even more chaotic in the oil markets when, after OPEC and its allies failed to agree a pandemic response, Saudi Arabia opened the floodgates and slashed prices of its crude oil exports. Oil prices endured the biggest single-day collapse since the Gulf War – over -24%.

It was further strain for a market now seriously considering the risk that shuttered economies across the globe would hit demand so hard that global storage would hit capacity. The May contract for West Texas Intermediate went negative – a first for oil futures – changing hands for almost -$40 ahead of expiry.

Meanwhile US 10-year treasury yields hit record lows of 0.318%, and gold climbed to its highest levels in seven years, pushing even higher in Q2.

Economies locked down, central banks crank up stimulus

Nations across the globe ordered their citizens to remain at home, taking the unprecedented step to voluntarily put huge swathes of their economies on ice for weeks. Even when lockdown measures were eased, the new normal of social distancing, face masks, and plastic screens left many businesses operating at a fraction of their normal capacity.

The world’s central banks were quick to step in during the height of market volatility and continued to do so as the forecasts for the economic impact of the pandemic grew even more grim. The Federal Reserve, the Bank of England, the Bank of Canada, the Reserve Bank of Australia, and the Reserve Bank of New Zealand all dropped rates to close to zero. Along with the European Central Bank, they unleashed enormous quantitative easing programmes, as well as other lending measures to help support businesses.

Unprecedented stimulus as unemployment spikes

Governments stepped in to pay the wages of furloughed employees as unemployment spiked – the US nonfarm payrolls report for April showed a jaw-dropping 20.5 million Americans had become unemployed in a single month. In the space of just six weeks America had erased all the job gains made since the financial crisis. The bill for US stimulus measures is currently $2 trillion, and is set to go higher when further measures are approved.

While most of the data may be improving, we’re still yet to see just how bad the GDP figures for Q2 are going to be. These, which will be released in the coming weeks, will show just how big a pit we have to dig ourselves out of.

H2: Recovery, US election, trade wars, Brexit

Markets may have recovered much of the coronavirus sell-off – US and European stocks posted their best quarter in decades in Q2 – but the world is still walking a fine line between reopening its economies and fending off the pandemic. Second wave fears abound. In the US in particular, economic data is largely pointing to a sharp rebound in activity, but at the same time Covid-19 case numbers are consistently smashing daily records.

These key competing bullish and bearish factors threaten to keep markets walking a tightrope in the quarters to come. Because of this, progress in the race to find a vaccine is closely watched. Risk is still highly sensitive to news of positive drug trials. The sooner we get a vaccine, the sooner life can return to normal, even if the world economy still has a long way to go before it returns to pre-crisis levels.

US Presidential Election: Trump lags in polls, Biden threatens to reverse tax cuts

The biggest talking point on the market in the coming months, aside from coronavirus, will undoubtedly be the US Presidential Election. The stakes are incredibly high, especially for the US stock market, and Democrat nominee Joe Biden intends to reverse the bulk of the sweeping tax cuts implemented by president Donald Trump.

Trump is currently lagging in the polls, with voters unimpressed by his response to the pandemic and also to the protests against police brutality that swept the nation. The president has long taken credit for the performance of the stock market and the economy, so for the latter to be facing a deep recession robs him of one of his key topics on the campaign trail.

Joe Biden may currently have a significant lead, but there is a long time to go until the polls, and anything could happen yet.

China trade war in focus, Hong Kong law adds fresh complications

The trade war with China would be a focus for the market anyway, but will come under increasing scrutiny in the run-up to the election. Thanks to Covid-19, anti-China sentiment is running high in the United States. This means Biden will also have to talk tough on China, which could mean that the damaging trade war is set to continue regardless of who wins the White House this time around.

Tensions have already risen on the back of China’s passing of a new Hong Kong security law, and coronavirus makes it virtually impossible that the terms of the Phase One trade agreement hashed out by Washington and Beijing will be carried out. Trump may be forced to stick with the deal, because abandoning it would leave him unable to flaunt his ability to make China toe the line during the presidential race. This would be positive for risk – markets were already rattled by fears that the president’s response to the Hong Kong law would include abandoning the deal.

How, when, and if: Unwinding stimulus

Even if we get a vaccine before the end of the year and global economies do rebound sharply, the vast levels of government and central bank stimulus will need to be addressed. Governments are running wartime levels of debt.

We’re looking at an even longer slog back to normalised monetary policy – something that banks like the Bank of England and the European Central Bank were struggling to reach even before Covid. There will be huge quantitative easing programmes to unwind and interest rates to lift away from zero, or potentially even out of negative territory.

Markets have been able to recover thanks to a steady cocktail of government and central bank stimulus. The years since the financial crisis have proven that it is incredibly difficult to wean markets and the economy off stimulus. There could be some tough decisions ahead, especially as governments begin to consider how they plan to repair their finances in the years to come.

Brexit deadline approaches, impasse remains

There is also Brexit to consider. While the coronavirus forced officials to move their negotiations online, little else seems to have happened so far. Both sides are refusing to budge and both sides are claiming that the other is being unreasonable. The UK does not want an extension to the transition period, and the two sides are running out of time to agree a trade deal.

We’ve seen before that both Downing Street and Brussels like to wait until the last possible moment to soften their stance. However, the risks here are higher because before there was always the prospect of another extension.

The last time negotiations were extended the battle in Westminster shocked the UK to its constitutional core. The Conservative landslide victory of 2019 gave Boris Johnson a much stronger hand this time around – the UK will leave in December, regardless of the situation.

Stay on top of the biggest events in H2

Whatever happens in the coming months, we’ll be here to bring you the latest news and analysis of the top developments and market events via the blog and XRay.

Coronavirus outbreaks leave stocks stuck in their ranges

Virus outbreaks in the US continue to weigh on the mood, as it suggests the run-up in stocks on hopes of a V-shaped economic recovery may be overly optimistic. Several states, mainly in the south, have been forced to re-impose lockdown restrictions after being the first to reopen. Dr Fauci described it as a ‘serious problem’. The dangers of reopening too quickly seem all too apparent, but investors are also keeping an eye on outbreaks in Tokyo, Australia and China.

European equities were a touch softer but trading near the flatline on Monday morning, with a general lack of direction about today’s trade. Major indices tracking around the middle of their June ranges after Asian equities fell. US equities were lower Friday and finished down for the week but, as the month ends, stocks have enjoyed a very strong quarter.

The FTSE 100 is up over 8% quarter-to-date, while the S&P 500 has rallied over 16% in Q2 and the DAX has surged 21%. Valuations remain the concern as we head into earnings season with the S&P 500 still trading at more than 22x on a forward basis.

Coming up this week – Powell testimony, US nonfarm payrolls

Of course stocks haven’t only rallied because of reopening economies – enormous liquidity thanks to the coordinated action of central banks has been key. Central bankers have been striking similar notes in terms of the response to the crisis and Jerome Powell, the Federal Reserve chairman, will testify in Congress again this week. The Fed’s rather downbeat assessment of the economic recovery helped to stop the rally in its tracks and since then indices have been trading ranges.

The US jobs report – on Thursday this week due to the July 4th holiday – will provide an important view on the pace of recovery, but we should note that the weekly unemployment claims numbers are proving a more sensitive and up-to-date barometer, not least since there are problems with the data gathering for the monthly nonfarms report.

Facebook shares tumble on ad boycott, but how long can brands stay away?

Facebook shares tumbled more than 8% on Friday as a growing number of companies join a boycott of the platform over hate speech. We saw how a boycott of Facebook by users failed to move the needle on earnings, but this time it’s different – it’s the big brands that pay the big bucks and the loss of Unilever, Starbucks, Coca-Cola, Levi’s and Diageo among others will create a headwind to revenue growth in the coming quarter.

I would think Facebook can and will do a lot more and will be able to take steps to assuage brands’ concerns, allowing the stock to recover. Moreover, will brands be able to avoid Facebook for very long? Virtue signalling is one thing, but they also need to shift product.

Crude oil was steady with WTI (Aug) around $38 after rallying off the medium-term support around $37.50. OPEC+ compliance in June is expected to be higher than in May, mainly because Saudi Arabia, Oman, Kuwait and the UAE are cutting above their quotas. In FX, cable continues to track its channel lower with a new low put in at 1.2315, with the previous support in the 1.2390 region now acting as resistance.

Wochenausblick: Starke Erholung von US-Gebrauchsgütern, Stimmung und PMIs auf dem Aufstieg

Diese Woche ist einiges auf dem Wirtschafts-Kalender, um die Märkte auf Trab zu halten, auch wenn die Nachrichten ruhig bleiben sollten. Vertrauenszahlen aus Europa, PMIs aus der ganzen Welt und einige Schlüsselzahlen zu US-Warenbestellungen und Ausgabezahlen werden uns helfen, die fortlaufenden Wirkung von Covid-19 und die Kurve der Erholung zu verstehen.

Euro-Zonen Umfrage zur Konsumenten- und Unternehmensstimmung

Die jüngsten Stimmungszahlen aus Deutschland und der Eurozone insgesamt werden genau im Auge behalten. Die Lockerung der Corona-Einschränkungen und die Wiedereröffnung von immer mehr Geschäften, wird erwartungsgemäß die Konsumenten- und Unternehmensstimmung verbessern, obwohl klar ist, dass beide Gruppen noch sehr pessimistisch sind.

Das Konsumentenvertrauen in der Eurozone für Juni wird sich erwartungsgemäß von -16 von -18,8 im Mai verbessern. Deutschlands Ifo Geschäftsklimaindex wird voraussichtlich 85,1 erreichen – hoch von den vorherigen 79,5, während die Konsum-Messungen der GfK erwartungsgemäß bei -12 für Juli liegen werden, folgend auf -18,9 für Juni.

PMIs werden Erwartungen für Q2-BIP formen

Dienstag bringt eine Reihe von Dienstleistungs- und Produktions-PMIs. Es werden die jüngsten Zahlen aus der Eurozone, dem UK und den USA erwartet. Obwohl sie noch geändert werden können, scheinen die jüngsten Zahlen die Erwartungen für den wichtigen Q2-BIP zu schärfen.

Es werden auf ganzer Linie starke Zuwächse erwartet, da wiedereröffnende Volkswirtschaften den Absturz verlangsamen, vor allem im Dienstleistungssektor.

Bestellzahlen von Gebrauchsgütern in den USA erholen sich

Bei dem jüngsten Riesensprung bei Beschäftigung und Einzelhandel, der alle erwarten gesprengt hat, scheint es wahrscheinlich, dass die Zahlen zu Gebrauchsgütern in den USA auch eine starke Erholung erleben.

Wie die meisten Kennzahlen, sind auch die Bestellungen über die letzten paar Monate, in einer in den letzten Jahren ungesehen Rate eingebrochen. Die Wiedereröffnung der US-Wirtschaft und sich verbessernde Aussichten für Konsumenten und Unternehmen, wird sich wahrscheinlich in einer starken Erholung niederschlagen. Analysten erwarten einen Sprung in Höhe von 7,1%, obwohl es wie bei allen Erholungen nach abrupten Abstürzen noch weile dauern dürfte, bis das Vorkrisen-Niveau wieder erreicht wird.

Zahlen zur Arbeitslosigkeit werden außerdem am Donnerstag erwartet. Der Konsens ist eine weitere Verlangsamung der Arbeitslosenzunahme, mit der Erwartung 1,3 Millionen neuer Arbeitslos-Meldungen. Das wäre das erste mal seit dem Rekordsprung von 6,86 Million in der letzten vollen Woche im März, dass die wöchentliche Zunahme bei unter 1,5 Millionen läge.

Persönliche Ausgaben in den USA steigen zu gelockerten Einschränkungen, höhere Beschäftigung

Persönliches Einkommen stieg im April und verzeichnete eine Zunahme von 10,5% dank der Konjunkturprogramme der Regierung, obwohl sich das nicht in einer gesteigerten Konsumnachfrage niederschlug – Ausgaben sind um 13,6% gesunken. Konsumenten legten das extra Geld zurück, es ist eine Zunahme der Sparrate um 33% zum Vormonat zu beobachten.

Es wird erwartet, dass Einkommen ohne Regierungsmaßnahmen im Mai um 5% gefallen wären, während Ausgaben um 3% gestiegen wären.

Highlights auf XRay diese Woche

Lesen Sie den gesamten Zeitplan der Finanzmarkt-Analyse und des Trainings.

07.15 UTC Daily European Morning Call
17.00 UTC 22-Jun Reading Candlestick Charts: Trading Patterns and Trends
From 15.30 UTC 23-Jun Weekly Gold, Silver, and Oil Forecasts
17.00 UTC 23-Jun Introduction to Currency Trading – Is it For Me?
14.45 UTC 25-June Master the Market with Andrew Barnett

 

Die wichtigsten Wirtschafts-Ereignisse

Behalten Sie die wichtigsten Ereignisse des wirtschaftlichen Kalenders dieser Woche im Auge:

14.00 UTC 22-Jun Eurozone Flash Consumer Confidence
07.15 UTC 23-Jun Eurozone/ DE/ FR Flash Services, Manufacturing PMIs
08.30 UTC 23-Jun UK Flash Manufacturing/Services PMIs
13.45 UTC 23-Jun US Flash Manfacturing/Services PMI
03.00 UTC 24-Jun RBNZ Interest Rate Decision
08.00 UTC 24-Jun German ifo Business Climate
14.30 UTC 24-Jun US EIA Crude Oil Inventories
06.00 UTC 25-Jun German GfK Consumer Climate
12.30 UTC 25-Jun US Durable Goods Orders
00.30 UTC 25-Jun US Unemployment Claims
14.30 UTC 25-Jun US EIA Natural Gas Storage
Pre-Market 25-Jun Accenture Plc – Q3 2020, McCormick & Co – Q2 2020
12.30 UTC 26-Jun US PCE, Personal Spending, Personal Income
14.00 UTC 26-Jun Revised University of Michigan Sentiment Index

XRay Live Talks: Trading in the time of Coronavirus

This week we invited our traders to take part in a live conversation with our chief market analyst Neil Wilson.

This was the first of our Live XRay Talks, our virtual trading roundtables and Q&As where we give traders the chance to meet the experts and discover what’s really going on in the markets.

Neil took questions on both the economic and market impact of Covid-19, the reaction of central banks and what could still be to come, OPEC production cuts, the green revolution and more.

Watch it here:

We’ll be bring our traders plenty more of these exclusive events, where you can get your questions answered by veteran traders and market professionals. Our next session takes place on July 4th with Andrew Barnett, senior trader at Trading Mastery.

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Fed rides to the rescue

Yesterday, I noted that policymakers would be forced to chuck even more money at pandemic relief as second waves of cases and a painful and incomplete economic recovery bit. Right on cue, the Federal Reserve announced it would start buying individual corporate bonds, building on the existing purchases of ETFs. The Fed ‘will purchase corporate bonds to create a corporate bond portfolio that is based on a broad, diversified market index of U.S. corporate bonds’, the central bank said.

The Fed is stepping things up after its statement last week left investors more than a little concerned about the pace of recovery. The move suggests that the Fed, as was clear last week, is worried about the economy enduring a protracted downturn. Meanwhile the White House is again said to be mulling a $1tn infrastructure plan to stimulate the economy. The two horsemen of risk sentiment recovery – monetary and fiscal stimulus – riding to the rescue again.

US stocks erased losses, Europe pushes higher on the open

US equities bounced strongly off the lows of the day. The S&P 500 closed up 0.83% at 3,066, a full 100 points above its low of the day. The Dow scrubbed out a 760-point drop to finish up 157 points. European equities closed lower but well off the lows. Things had looked a little dicey as the major indices tested some key support, but the ‘plunge protection team’ arrived right on time. The Vix swung from a high close to 45 to close under 35 – the Fed made clear it’s got this.

Today the major bourses have taken their cue from Wall Street and opened higher. Asian markets rose. The FTSE 100 rose more than 2% to back above 6,200 and test the 100-day line resistance, while European counterparts rose by similar amounts. Ashtead Group rose c15% in early trade after it maintained its dividend despite a halving in profits. The infrastructure stimulus touted by the White House would be a massive boost for the construction equipment company.

Geopolitical tensions lurk as Korea tensions rise, Chinese and Indian forces clash

Reports circulating close to the market open of North Korea blowing up the inter-Korean liaison office in Kaesong near the border need to be monitored but we have yet not seen any major market response. There are also reports of an ‘incident’, between Chinese and Indian forces on the border later described as a ‘violent face-off’ in which at least three Indian soldiers were killed. So, a little geopolitical shenanigans to add to the mix this morning but thus far nothing overly significant for the market.

Support for risk assets helped lift crude prices, with WTI for August climbing back above $37 around the middle of the range of the consolidation over the past month. Support is holding around $35 but the 200-hour moving average at $37.70.

GBP/USD bounces off lows, tests 200-day SMA

FX markets remain broadly steady with majors holding within ranges, with risk currencies supported this morning. GBPUSD has bounced firmly off yesterday’s lows at 1.2450 to test the 200-day SMA at 1.2690, which has acted as resistance and the pair has nestled back on the old comfort around 1.2630. EURUSD traded above 1.13 again as the long-term 23.6% level at 1.1230 starts to look like meaningful support to act as a base for the next leg higher.

Chart: FTSE recovery looks to get back into the channel and recover both the old 50% retracement and the 100-day simple moving average, which after last Thursday is starting to act as near-term resistance. Thursday’s cash market opening high at 6,329 needs to be cleared to resume the uptrend.

Chart: SPX tested the old 61.8% retracement and 100-day SMA at 2936, which held. Thursday’s cash opening high at 3,123 needs to be cleared to resume the uptrend.

Stocks extend last week’s losses on second wave fears

European stocks plunged and US futures tumbled on Monday as equity markets extended last week’s losses amid fears of a second wave to the pandemic. We are seeing pockets of cases in Beijing suddenly – the first in 50 days, whilst Alabama, Florida and South Carolina have reported record numbers of new cases for three days straight.

The dreaded second wave will weigh on equity markets – it is already sparking a wave of selling – and force policymakers to chuck even more money at this. Markets just need to think things are heading in the right direction to go up; it’s the rate of change that matters, so fresh waves of cases are taken as a sell signal.  Equity markets had also clearly become overstretched and overbought.

Stocks dumped on fears of Covid-19 second wave

The FTSE 100 slumped under 6,000 to test the 50-day moving average around 5950, potentially heading for the key support region at 5900. If this goes we can easily see a retreat to the Apr swing lows around 5641 and 5575. BP shares slumped 5% as it wrote off $13.5bn-$17bn of asset values due to lower forecast oil prices – this will only raise speculation that the board will be forced into cutting the dividend sooner or later.

Asia was broadly weaker overnight, with sentiment also being affected by Chinese industrial production, fixed-asset investment and retail sales all falling short of expectations. Futures indicate the S&P 500 open around 2950, a little above the 100-day and 50-day moving averages, having broken beneath its 200-day line. Look especially at 2936/8, where the 100-day and the old 61.8% retracement of the March rout converge.

Bulls fought a rear-guard action on Friday, but that rather hard-fought rally looks capitulation and the path back to 2800 is open. What could change this? You’d need to see a drop in cases and the rebound in the economy as stimulus works its way through to consumers spending with confidence again.

As discussed last week, S&P 500 valuations are very rich and first the Covid-economy trade and now the first reopening trade are all but over, so investors need to find new reasons to buy. Second wave fears are dominating, and the Fed has killed off any last thoughts of a V-shaped recovery.

Bank of England, Brexit in focus this week for UK assets

The Bank of England will this week need to stump up another £100bn-£200bn in QE but should leave rates unchanged. It’s been painting a rather optimistic view of recovery but will need to lower expectations this week for how soon the economy gets back to normal.

On the Brexit front, Boris Johnson will hold a call with EC boss Ursula von der Leyen today in what could be a moment that injects talks with new vigour. The PM will likely threaten no-deal, but it’s hoped this will focus the attention of the EU on delivering a compromise. GBP will be exposed to significant headline risk and may partially explain the currency’s fall this morning.

FX was in risk-off mode too, with the dollar finding fresh bid. GBPUSD broke down through the 1.25 region and was last at the lows of the day with the 50-day moving average around 1.2410 in sight. EURUSD was holding at 1.1230. Crude prices were weaker as risk sentiment soured, with WTI for August trading under $35.

Chart: SPX eyes path back to 2800

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