Finance Update – Covid 2.0 in China?

Asia – Fears push down regional equities

Fears of a COVID-19 resurgence in China plus disappointing data there this morning has Asian markets severely down this morning, led by the Kospi’s 3.8% loss followed by the Nikkei’s -3%.

Only the Shenzhen Composite seems to be coming up for air with a 0.17% increase. At present, 10 Beijing neighbourhoods are under lockdown.

Retail sales in China lost a 1/3 of April’s data with a 2.8% contraction while industrial production increased by 4.4% – a half percent less than hoped for.

The real estate marketA location or entity where people and entities can negotiate and trade assets of value. is picking up, with investments up 8.1% in May, based on a Reuters report.

Japan’s PM Abe told Parliament this morning that he would resume economic reforms only after deflation was vanquished. Continued debt, however, had its limits, he said.

Europe – Mr. Johnson telephoning Brussels

Industrial output in Italy contracted by a better-than-expected 19% MoM in April while production throughout the EU contracted by 17% MoM – again, better than the expected -20%.

May’s CPIs also came in better than expected in France (0.2% MoM) and Portugal – 0%. As UK PM Johnson launches video negotiations with the EU, UK data – in line with Brexit talks expectations – generally disappointed with a 24.3% contraction for April’s industrial production and a 20.4% contraction in April’s GDP (MoM).

The nation’s non-EU trade deficitA trade balance that is negative as a result of cost (imports, on the national level) being greater ..., on the other hand, narrowed to £2.66 bn, Die Welt this morning reports that Germany has agreed to increase its contribution to the EU budget by 42%.

Indexes on Friday closed generally up led by the AEX’s 0.91% increase, while the DAX lost 0.18%.

Americas – 25k new COVID cases on Saturday quash futures

US indexes managed to redeem themselves upon closing Friday, the Dow up 1.9%, and the Nasdaq up 1.01%.

Futures this morning, however, have already doubled that in losses with the Dow down 3.11% and the Nasdaq down 2.11%, as over 25000 new COVID cases were reported over the weekend, primarily due to continued riots throughout the nation.

Data as the week ended was mixed, May’s producer price index down a better-than-expected 0.8% (YoY) in May but continuing jobless claims losing half the expected to land at 20.92mn claims.

Dallas Fed head Kaplan told CBS yesterday he expects unemployment to end the year above 8%. In initial number, however, improved to 1.54mn claims.

Import prices were green with a 1% increase, but export prices were red with a mere ½ percent improvement, while the preliminary Michigan consumer sentiment index showed a vast improvement for June – 78.9 points.

Commodities – Oil down on resurgence fears

Oil was down 4.6% at the end of the Asian session despite Friday’s 7-rig deduction, based on Baker Hughes’ data.

Corporate – Hertz ignoring reality

Hertz shares added 37.38% on closing after gaining permission to sell up to $1 bn in shares despite bankruptcy proceedings, bringing its 1-day increase to 250%, or $2.83 – still nowhere near its pre-COVID high of $20.29 or its 2014 $107 record. Kellogg’s ($63.59 -0.28%) pays dividends later today.

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