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Finance Update – Vaccine Hopes Buoy Markets


Asia – Japan Confident

Asian indices this morning are all green led by the Hang Seng’s 1.51%, the Nikkei straggling behind with a mere 0.08% increase, all buoyed by expectations of a 3m job addition to today’s early NFP report from the US and positive COVID-19 vaccine tests from Pfizer and BioNTech.

Consumer confidence surprisingly rising to 28.4 in June, Japan has announced a $4.7 bn cut in its bond issuing programme, preferring itself to tap other sources for the COVID-driven tax income shortfall.
Australia’s trade surplus widened by about $95mn, half the expected, in May.

Europe – Merkel Preparing for No-Deal

Equities closed mixed yesterday, though mostly in the red. The DAX lost 0.41%, the FTSE 0.19% but the AEX and SMI were up 0.53% and 0.44%, respectively.

The ECB yesterday decided to lower requirements for bank mergers in the EU, aimed at consolidation in an industry stricken by low profits and lingering damage from the 2008 financial crisis.

Data from Germany yesterday was positive, retail sales up 13.9% MoM in May and unemployment adding a mere 1/10 of a percent, bringing it to 6.4%, rather than the 6.6% expected.

The Manufacturing PMI for June increased by half a point to 45.2, helping push up the EU figure t a much-better-than-expected 47.4, despite a disappointing 47.5 in Italy, which was still up 2 points on the month before.

The UK figure remained steady at 50.1, just north of expansion, while housing prices contracted by a further 1.4% MoM for the first time since 2012 in June.

Angela Merkel yesterday told a news conference that despite accelerated negotiations with the UK, Europe should prepare for a no-deal Brexit.

Americas – Senate Approves More Help

The USDX is down 8 cents after ISM’s manufacturing PMI missed expectations at 42.1. Markit’s figure was in the green at 49.8, while ADP’s employment change saw a disappointing 2.37 million jobs added.

Construction spending also continued contracting, 2.1% in May.
The FOMC’s minutes yesterday reveal members taking note of the worst drop in economic activity since WW-2, but a refusal to consider negative interest rates.

The Senate yesterday approved an extension of its $600 bn lending program for small businesses while approving a $1.5tn infrastructure package, despite White House and Republican objections.

Markets were mixed last night, the Nasdaq adding 0.95% but the Dow losing about a third.

Commodities – Oil Rises on Reduction

Oil continues battering resistance at $39, rising 54 cents to 39.81 overnight after the EIA confirmed the API’s drawdown from yesterday with a 7.195-million-barrel reduction of its own.

And gold, after finally breaching 1800, plunged by $38 as Asia came online before settling at 1774 this morning.

Bitcoin remains above 9240 for now, as the Deutsche Boerse lists an exchange-traded product tracking it on Xetra – its 2nd in a month.

Meanwhile, the Swiss government unanimously legislated a set of laws aimed at removing legal barriers from applying blockchain and other ledger technologies.

Corporate – GAAFs Under Scrutiny

Google is up 1.69% after the EU launched new rules aimed at forcing it and other tech companies to share data with smaller firms.

Amazon’s status as a competitor with the firms it markets is also being targeted, as is Apple’s unfair treatment of rivals to its Apple Music store.

In the US, Apple, Amazon, Google and Facebook heads have agreed to appear before a Congressional anti-trust probe, Zuckerberg only agreeing if the other 3 arrive.

Seeking Alpha this morning reports that the Facebook primo told a town hall meeting last week that he would not change company policy due to the pressure of advertisers, saying they would be back “soon enough.”

Meanwhile, Amazon (+4.35%) has purchased Zoox auto-delivery service for $1.2 bn, placing it in the market for autonomous ride services.

Boeing ended down 1.63% despite completing test flights yesterday for the 737MAX. The FAA has refused so far to disclose the results of the tests, still feeling the sting of its enforced approval of the beleaguered aircraft in the past.

GM is down 1.34% after announcing a 34% drop in Q2 sales. And FedEx jumped 16% but returned about a third of that after posting much better than expected Q4 results.

Best Buy and Tesco today pay dividends, and Marks & Spencer will hold a shareholders meeting.


08:00 AM GMT Italy Unemployment
09:00 AM GMT EU PPIs and unemployment
12:30 PM GMT US NFP, Trade Balance, Jobless Claims, earnings & participation. Factory orders at 14:00
12:30 PM GMT Canada Manufacturing PMI, Imports & Exports
11:00 PM GMT Australia Svc & Comp PMIs. Retail sales at 0:30
01:45 AM GMT (+1) China Caixin Services PMI

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