Thursday Market minute
- Global stocks fall as coronavirus infection rates remain high in the United States and investors ignore stronger-than-expected GDP data in China.
- China’s second-quarter GDP grows 3.2%, but June retail sales fell for the fifth consecutive month, underscoring the fragility in the world’s second-largest economy.
- Infections in the US increase by 67,100, the second highest on record, taking the grand total of more than 3.5 million as states rethink plans to reopen.
- US retail sales rose 7.5% in June, against a market forecast of 5.2%, while jobless claims are flat at 1.3 million for the week ending 11 of July.
- European stocks weaken after the ECB rate decision, while the dollar tilts higher as traders take a cautious stance ahead of Thursday’s session.
- US equity futures suggest a weaker opening on Wall Street after earnings from Johnson & Johnson, Morgan Stanley and Bank of America.
Wall Street futures fell lower on Thursday, as the dollar regained its balance and oil prices fell, as markets reacted to China’s mixed economic data, tensions between Washington and Beijing, and currency rates. Nearly record coronavirus infection in the United States.
Retail sales in the United States for the month of June increased 7.5% from last year, the Commerce Department said, a gain that coincided with record data on job creation last month. However, jobless claims for the week ending July 11 remained at 1.31 million, suggesting that stalled reopening plans could increase jobless lists.
The breadth of the pandemic in the world’s largest economy, which has infected more than 3.5 million people and killed at least 137,000, shows little sign of diminishing this week as new cases surpassed 67,300 yesterday, according to data. CDC, and state governors continue to pause or reverse plans to reopen.
However, stronger-than-expected bank earnings, as well as hopes of a new Washington fiscal stimulus and a short-term vaccine advance have kept markets high for most of the month, leading to the S&P 500. to a positive territory for the country. year following the closing of the previous night.
Better-than-expected data on China’s GDP this morning, which showed that the world’s second-largest economy rebounded by 3.2% in the three months ending June, may have added to that optimism, but investors were uneasy about the Fifth Consecutive Monthly Decline in Retail Sales in June, as well as the worrying escalation of tensions between Washington and Beijing, which will include more travel sanctions by senior government officials, are more restrictions on the type of business than Huawei Technologies can do with American companies.
With a handful of front-line and bank earnings slated for Thursday, and the European Central Bank is making no changes to either its key policy rates or its € 1.35 trillion easing program, traders are decidedly cautious when entering the opening bell after weakness. -that the expected weekly unemployment claims data.
Contracts linked to the Dow Jones Industrial Average, which increased 4.1% in July, are the price of a 210-point withdrawal, while those linked to the S&P 500, which only fell 0.13% during the year, suggest an opening of 24.5 points. bell decrease
Wider market cautiousness helped lift the US Dollar Index, which measures the US Dollar against a basket of six global currencies, and pushed benchmark 10-year Treasury yields modestly lower to 0.609%, in overnight operations.
The strength of the dollar, as well as OPEC’s decision to reduce its production cuts by 2 million barrels per day to 7.7 million, as of August, reduced world oil prices, although the falls were limited by data from the Department of Energy that showed a higher increase. Decline in US crude oil inventories of 7.5 million barrels last week.
WTI contracts for August delivery, the US benchmark, have traded 52 cents lower since their close Wednesday in New York and changed hands at $ 40.68 a barrel early in European trading, while Brent contracts for August, the global benchmark, were seen 38 cents lower at $ 43.41 per barrel
European stocks also fell after the ECB rate decision at 7:45 a.m. EST, held back by weak second-quarter gains for regional blue-chips and weak China retail sales data.
The Benchmark Stoxx 600 Index fell 0.6% in mid-day trade, with a 0.55% drop for the German DAX performance index and a 0.4% drop for the FTSE 100 in London.
Overnight in Asia, China’s shares plummeted, dropping the most in five months, as the stronger-than-expected second-quarter GDP rebound increased the chance of slowing government stimulus, which has played a role. important in the post-coronavirus rebound in the domestic market.
The Chinese compound in Shanghai fell 4.5%, while the tech-focused CSI300 in Shenzen fell 4.8%, lowering the region’s markets and dragging the ex-Japan benchmark MSCI to a decline of 1 , 75% in the last hours of trading. Meanwhile, Japan’s Nikkei 225 closed 0.76% lower at 22,770.36 as Tokyo prepares for a possible outbreak of coronavirus infections.
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