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News / Analysis

Finance Update – Covid 2.0 Concerns Traders


Asia – China maintains interest

Asian markets are mixed this morning, the Shanghai Composite down 0.14% and the Shenzhen Composite up 0.2%.

The Hang Seng is down 0.84% and the Nikkei -0.23%. The Yuan momentarily fell 2 pips overnight after the People’s Bank of China kept interest rates level at 3.85%, despite fears of a Corona resurgence throughout the nation.

Bloomberg reports that Chinese banks have offered 3.9 trillion yuan ($551 billion) worth of loans relief for struggling small businesses. Banks have reported a 5.6% increase in profit during Q1, while the economy contracted 6.8%.

Europe – Germany appoints pro-ECB judge

The pound is up a third percent this morning following Friday’s much better than expected retail data, which shows a 12% increase MoM in retail sales.

Government sources told Reuters yesterday that they would seek legislative changes that would enable additional scrutiny of takeover bids by foreign entities of UK companies.

Meanwhile, the Euro is up half that after Germany’s producer price index fell 2.2% YoY in May and EU current accounts show a halving of transactions to €14.4 bn in April.

Germany’s constitutional court is set to replace some members today in hopes of lowering the institution’s animosity towards ECB bond purchasing plans.

Eurosceptic court president is set to retire and be replaced by Astrid Wallrabenstein – a pro-Europe Greens party appointee.

The Swiss franc has managed to regain half of its 10-pip loss Thursday on a billion franc drop in May’s trade surplus. The central bank also selected to maintain its 0.75% interest rate.

And in Italy, PM Giuseppe Conte will be seeking a wider budget gap and EU assistance to restart his COVID-stricken economy through infrastructure projects.

Americas – Weak jobs, hopes for homes

This morning finds the dollar down 0.17% on the back of disappointing jobless claims, Thursday – no discernible improvement on the continuing level, and a further 1.5 million new claimants during the 2nd week of June.

The currency’s performance was buoyed by risk aversion, which is sending investors towards safehaven assets.

Bloomberg reports that U.S. home-mortgage delinquencies climbed to nearly decade-long record highs in May.

Index futures this morning are undecided after the Dow closed down 0.8% Friday.

Commodities – Gold at a record high

Oil is down a further 1/3 percent this morning after the Baker Hughes company on Friday announced the closure of another 10 rigs, bringing the count to 189.

Meanwhile, gold broke through the historic 1760 support level overnight, to settle at 1766 this morning after briefly touching 1777 – an 8-year record high.

Corporate – American seeks 2.5bn

American Airlines closed down nearly 3% ahead of its announcement Sunday that it was seeking $2.5 bn in financing – just over half in shares, the rest in convertible bonds.

Today marks the ex-dividend date for Deutsche Telekom (+0.33%) – the deadline for purchasing shares ahead of a dividend payment.


10:00 AM GMT UK Confederation of British Industry
12:00 PM Germany BundesBank monthly report and Pres Weidmann’s speech
12:30 PM GMT US Chicago Fed National Activity Index. Existing Home Sales at 14:00
02:00 PM GMT EU Consumer Confidence
11:00 PM GMT Australia ComBank PMIs
00:30 AM GMT (+1) Japan Jibun Bank Manufacturing PMI (preliminary – June)

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