Finance Update – Markets Get Interesting!

Asia – COVID pushes assets down

With no major data released yesterday, this morning saw a 9% reduction in Japan’s industrial production for May and a $16bn drop in China’s June Trade surplusA trade balance that is positive as a result of income (exports on the national level) being greater... to $46 bn despite a surprising increase in exports, as global economies reopen.

Surprising to the upside, Australia’s business confidence index rose into positive territory to one level pointThe unit of price change for bonds (1%), futures (0.01%), shares ($1) and mortgage fees (1% of the p..., while New Zealand’s inflationThe rise in prices for goods and services, resulting in the deterioration of a currency’s purchasi... gauge fell to 2.4% YoY.

And finally, in what may be seen as a concession to dramatically rising corona infections, Asian indices this morning are all in the red, save New Zealand’s Dow JonesA business and financial news & analysis company that publishes the Dow Jones 30 index, which tracks..., which added a quarter percent.

The Shenzhen lost 1.84%, the Nikkei 0.96 and the Hang Seng 1.39%. In Singapore, COVID has claimed a 41.2% plunge in GDP QoQ, reported overnight – its worst downturn in history.

Americas – US takes to the S.China Seas

The dollar index lost nearly 40 cents yesterday after the US Treasury reported a worse-than-expected $864 bn deficitA trade balance that is negative as a result of cost (imports, on the national level) being greater .... The currencyA financial medium for the exchange of value. In economics, it is the monetary system employed by a ... regained most of its losses overnight, this quite possibly on an increase in riskThe level of deviation of past returns and/or losses on an asset from the mean. Usually, the higher ... aversion as corona infections rise to record highs and the US rejects China’s claim to South China Sea offshore resources. Brunei, Malaysia, the Philippines, Taiwan and Vietnam also lay claim to the potentially oil-rich region.

Adding to the flames, the White House is reportedly planning to repeal an auditing agreement with China, which will place US-listed Chinese companies under local scrutiny.

Amongst major benchmarks, only the Dow managed to produce a 0.04% increase as earnings season sets off. The Nasdaq lost 2.13% and the S&P nearly a full percent.

Europe – EU budget up for grabs

European indexes yesterday closed up above a percent each – the CAC40 leading with 1.73%.

The European Commission is said to meet Friday to ratify the 2021-2027 budget, which includes economic stimuli but – apparently – insufficient climate-control measures – €80 bn compared to the 2.4 tn required.

In the UK, the BRC like-for-like retail sales measure increased to 10.9%, while the nation’s trade surplus nearly doubled in May to £4.3 B. Manufacturing production soared by 8.4% MoM after contracting by 24% in April, industrial production by 6%, but GDP for May missed the mark with a 1.8% expansion, this after April’s 20.3% contraction.

Consumer inflation in Germany remained level at 0.8%. Merkel said she saw no reason to suspend diplomatic ties with China over the Hong Kong “issue”.

Commodities Oil down on OPEC pressure

Oil is back down below the 40 mark after hedgeTo protect one’s investments against losses by investing simultaneously in a (usually) related ins... funds began selling over 21 million barrels-worth of futures contracts and options last week.

Today and tomorrow, OPEC members meet to discuss a relaxation of output quotas, even as demand falls. Meanwhile, Reuters reports that the EIA is projecting a drop in shale production to a 2-year low.

Bitcoin is down a percent plus after the World Bank published findings pointing out the limitations of smart contracts as a financial tool since it would not increase the efficiency of already-automated loan cycle procedures.

Corporate – Big-3 launch earnings for real

Tesla closed down 3% after surging 13% upon opening, this as yet another potential rival announces plans to go public – this time, Detroit’s Fisker, with an expected valuation of $2.9 bn, which was actually the first company to produce a plug-in hybrid electric car (the Karma) in 2008. Nikola went public last month with its hybrid pickup from Phoenix, Arizona and shares offered at about $12. They are now at $53.95 after topping at 66.

Alibaba is down 6% in Hong Kong and 3.6% in NY after Jack Ma reportedly sold $8.2 bn in his stake.

On the earnings front, Pepsi closed up a third after surprising to the upside, with a 3.1% decline in revenues in Q2. EPS fell by 18% to $1.18. Today, expect earnings from JP Morgan, CitiGroup, Wells Fargo, Delta Airlines and Fastenal.

Continental holds a shareholders meeting and today is ex-dividend for Danone.

Events