Global Stock Market Rally

July 6, 2020

Share prices in Asia overnight leaped 5.7% in China, 3.8% in Hong Kong,1.8% in Japan, 1.7% in South Korea, 1.4% in Singapore and 1.3% in India. Key markets around Europe are currently up by 2.3% in Spain, 1.9% in Italy, 1.8% in Great Britain, 1.6% in France and Germany and 1.0% in Switzerland. A U.S. rise of at least 1.0% in signaled in the futures market.

The global number of identified Covid-19 cases now exceeds 11.5 million, and U.S. cases number less than 17,000 short of 3 million. The death totals are 5.374 million globally including 132.6 million in the United States.

10-year sovereign debt yields climbed two basis points in Japan, the U.K. and U.S. futures.

The return of risk aversion has seen the dollar and yen retreat overnight by 0.7% against the loonie, 0.6% relative to the euro, peso, and yuan, and 0.4% vis-a-vis the Swiss franc and Australian dollar. Gold is 0.2% softer, while the price of  WTI oil edged up 0.1%.

Released data today show improvement related to the staggered reopening of business activities. But activity levels remain far short of pre-pandemic conditions.

Retail sales in the euro area, for instance, rebounded 17.8% in May. However, the April-May sales volume was still 11.1% less than the first-quarter mean and 12.4% below a year earlier.

French retail sales jumped 23.3% in May, more than halving their on-year reduction to 12.0%.

Austrian retail sales increased 23.3% in May, resulting in a 4.8% year-on-year rise after April’s 16.7% 12-month rate of decline.

Belgian retail sales rose 20.0% in May following drops of 10.5% in March and 8.8% in April. Sales in Belgium were 0.4% softer than a year earlier.

Around Eastern Europe in May, Hungarian retail sales rose 6.1% on month but fell 2.1% on year,  Polish retail sales went up 10.1% on month but fell 8.6% on year, and Romanian sales jumped 18.5% monthly while dipping 1.2% compared to May 2019.

German industrial orders climbed 10.4% in May, lifted by gains of 12.3% in domestic demand and 8.8% in foreign orders. However, the May level of new orders was still 36.8% less than in February and down 29.3% from a year earlier.

The Sentix gauge of investor sentiment toward the euro area economy rose six index points to a 4-month high June but at -18.2 was nearly 26 points weaker than January’s reading.

Compared with on-year plunges, new car sales in the U.K. of 97.3% in April and 89.0% in May, a drop of 34.9% in June represents considerable improvement but left the first-half drop at 48.5%.

Irish industrial production was 11.3% lower in May than a year earlier. Spanish industrial output rose 14.7% on month but fell 24.5% on year in May.

Dutch consumer confidence improved 4 index points in June but was still 25 points below the March reading of -2. Spanish consumer sentiment rebounded 7.8 points last month to a 3-month high but remained 26.5 index points weaker than January’s level. Indonesian consumer confidence printed at 83.8 last month, up from 72.8 in May but down from 126.4 back in January.

Euroland’s construction purchasing managers index rose another 9.2 points to 48.3 in June versus a record low of 15.1 scored in April. Nonetheless, that was the fourth straight sub-50 reading, signalling a continuing contraction of activity but at a greatly more gradual pace.

Construction activity according to PMI reports in Germany, unlike from those in France and Italy, had not sunk to a record low in April but is now lagging the revival of those other economies. The June construction PMI readings of Germany, France and Italy are 41.3, 52.8, and 51.6. France and Italy experienced their fastest growth in 19 and 14 months.

The current account of the European Union in the first quarter equaled EUR 59.9 billion, 41% smaller than a year earlier and equal to 1.8% of GDP versus 2.2% in the previous quarter and 3.0% of GDP in the first quarter of 2019.

Britain’s construction PMI soared to a 23-month high of 55.3 in June from 28.9 in May and a record low of 8.2 in April.

Hong Kong’s private purchasing managers index increased 5.7 points in June to a 26-month high of 49.6.

Non-oil PMI readings in Egypt, Saudi Arabia, and the U.A.E. of 44.6, 47.7, and 50.4 respectively represented a 4-month high, a 2-month low, and an 8-month high.

Brazil’s service-sector and composite PMIs in June were each the best scores since February but at 35.9 and 40.8 were still substantially below the 50 level that separates positive from negative activity growth.

Still to come: U.S. non-manufacturing PMI, Bank of Canada business outlook survey results, and the latest monetary policy decisions of the Bank of Israel and National Bank of Romania.

Copyright 2020, Larry Greenberg. All rights reserved. No secondary distribution without express permission.


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