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On 12 June 2020 - US recovers on dip-buying, Europe firms, Asia soft

Anne D Picker

Anne D Picker - Econoday

Uncertain economic outlook dampens multi-month rally from March lows

US markets

Equities recovered some of Thursday’s dramatic losses on buy-the-dip sentiment Friday but ended lower on the week. Many investors remained cautious about rising Covid-19 infection rates in many US states and concerned that the rally from March lows remains overdone given the dicey economic outlook. On the day, the Dow Jones industrial index rose 1.9 percent; the S&P 500 gained 1.3 percent, and the NASDAQ rose 1.0 percent.

Among sectors, real estate was the best performer, with financials and energy beating the tape and bouncing back from Thursday’s plunge. Materials gained with support from commodities and chemical stocks. Technology shares outperformed, led by software and networking companies. Industrials perked up with airlines leading the way. Consumer discretionary shares lagged on poor earnings from retailers Lululemon and PVH.

Among companies in the news, software company Adobe rose 4.9 percent after an earnings beat but removing its guidance. American Airlines surged 16 percent after reporting improving passenger traffic. Hertz, the struggling car rental company, jumped 37 percent after it announced plans to sell more shares following the recent stock price recovery.

On the downside, Lululemon, the sports apparel retailer, declined 3.8 percent after missing the market’s high earnings expectations. PVH, another clothing retailer, fell 5.9 percent after an earnings miss and lower guidance

In US economic data, consumer sentiment improved in June and, at 78.9, exceeded the top side of Econoday's consensus range. This index fell nearly 20 points in April to 71.8 before edging higher in May to 72.3. June's success reflected improvement in expectations which rose more than 7 points though the assessment of current conditions also improved, up 5-1/2 points.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$0.86 to US$38.90, while spot gold rose US$3.74 to US$1,731.59. The US dollar rose against most major currencies but weakened versus commodity currencies of Australia, New Zealand and Canada. The US Treasury 30-year bond yield rose 6 basis points to 1.46 percent while the 10-year note yield rose 4 basis points to 0.71 percent.

European markets

Equities recovered early declines to end mixed to slightly higher Friday following Thursday’s big selloff, as sectors that led Thursday’s losses bounced back. Sentiment appeared to stabilize as investors focused on an improving pandemic picture in the Eurozone. The Europe-wide STOXX 600 rose 0.3 percent, the German DAX declined 0.2 percent, the French CAC rose 0.5 percent, and the UK FTSE-100 also rose 0.5 percent.

Among sectors, best performers were basic resources, real estate, autos, media, travel & leisure, oil & gas, utilities, banks, and insurance. Lagging were financial services, health care, chemicals, retail, personal & household goods, technology, construction, and telecom.

IAG, owner of British Airways, rose 4.8 percent, as it joined several other airlines in filing legal action against UK quarantine rules. Pearson rose 11.7 percent on news an activist investor had taken a stake in the UK publisher. ON the downside, AstraZeneca, the vaccine maker, fell 0.9 percent on mixed clinical trial news.

In economic data, Eurozone goods production dropped in April. A record 17.1 percent monthly fall was less than expected but with March's drop revised from 11.3 percent to 11.9 percent, annual workday adjusted growth still slumped from minus 13.5 percent to minus 28.0 percent. Separately, the UK economy imploded in April, the first full month of the lockdown. Real GDP contracted fully 20.4 percent on the month, much more than expected and almost ten times larger than the steepest pre-Covid-19 decline.

Asia Pacific markets

Most major Asian markets closed lower on the day Friday, extending losses on the week. The regional data calendar was light, with investors instead taking direction from the heavy losses on Wall Street on Thursday and renewed concerns about the US economic outlook and a potential second wave of Covid-19 infections. Australia’s All Ordinaries index fell sharply for a second consecutive day, closing down 2.0 percent on the day and 2.6 percent on the week after strong gains earlier in the month.  Japan’s Nikkei and Topix indices fell 0.8 percent and 1.2 percent respectively on the day, taking losses on the week to 2.4 percent and 2.6 percent respectively, while Hong Kong’s Hang Seng index closed down 0.7 percent on the day and 1.9 percent on the week. the Shanghai Composite index outperformed with no change on the day and a fall of 0.4 percent on the week.

Indian data scheduled for release Friday were not published due to the ongoing impact of the national lockdown and other measures introduced to curb the domestic spread of Covid-19. These restrictions severely limited the ability of officials to collate the data. Inflation data for May were not published, as was the case with April data last month. Industrial production data for April were also not published.

Looking forward

Central Bank activities

Jun-15

Australia

RBA Meeting Minutes

 

Japan

BOJ Policy Announcement

Jun-16

US

Fed Chair Semiannual Monetary Policy Report

Jun-17

US

Fed Chair Testimony on Economy and Policy

Jun-18

Switzerland

SNB Monetary Policy Assessment

 

UK

BOE Policy Announcement & Minutes

Jun-19

Japan

BOJ MPB Minutes

 

 

 

The following indicators will be released this week...

 

 

 

Europe

 

 

Jun-15

Italy

CPI (May)

 

Switzerland

Producer & Import Prices (May)

Jun-16

Germany

CPI (May f)

 

 

ZEW Survey (June)

 

UK

Labor Market Report (May)

Jun-17

Eurozone

HICP (May)

 

UK

CPI (May)

 

 

PPI (May)

Jun-18

Switzerland

Merchandise Trade (May

 

UK

Retail Sales (May)

Jun-19

Germany

PPI (May)

 

UK

Public Sector Finances (May)

 

 

 

Asia Pacific

 

 

Jun-15

China

House Price Index (May)

 

 

Fixed Asset Investment (May)

 

 

Industrial Production (May)

 

 

Retail Sales (May)

 

India

WPI (May)

Jun-16

Australia

Residential Property Prices (Q1)

Jun-17

Japan

Merchandise Trade (May)

 

Singapore

Merchandise Trade (May)

Jun-18

Australia

Labor Force Survey (May)

 

New Zealand

GDP (Q1)

Jun-19

Japan

CPI (May)

 

 

 

Americas

 

 

Jun-15

Canada

Manufacturing Sales (April)

 

US

Empire State Manufacturing Index (June)

 

 

Treasury International Capital (April)

Jun-16

US

Business Inventories (April)

 

 

Housing Market Index (June)

 

 

Industrial Production (May)

 

 

Retail Sales (May)

Jun-17

Canada

CPI (May)

 

US

Housing Starts (May)

Jun-18

US

Jobless Claims (Week of June 13)

 

 

Philadelphia Fed Business Outlook Survey (June)

Jun-19

Canada

Retail Sales (April)

Global stock markets

 

Index

12 Jun 2020

Daily Change

% Change Daily

North America

United States

Dow

25605.54

477.37

1.9

 

NASDAQ

9588.81

96.08

1.0

 

S&P 500

3041.31

39.21

1.3

Canada

S&P/TSX Comp

15256.57

205.65

1.4

Europe

UK

FTSE 100

6105.18

28.48

0.5

France

CAC

4839.26

23.66

0.5

Germany

XETRA DAX

11949.28

-21.01

-0.2

Italy

MIB

18888.16

81.30

0.4

Spain

Ibex 35

7292.7

14.70

0.2

Sweden

OMX Stockholm 30

1609.07

0.01

0.0

Switzerland

SMI

9796.37

-32.21

-0.3

Asia/Pacific

Australia

All Ordinaries

5959.94

-119.60

-2.0

Japan

Nikkei 225

22305.48

-167.43

-0.8

 

Topix

1570.68

-18.24

-1.2

Hong Kong

Hang Seng

24301.38

-178.77

-0.7

S. Korea

Kospi

2132.3

-44.48

-2.0

Singapore

STI

2684.63

-19.58

-0.7

China

Shanghai Comp

2919.74

-1.16

0.0

Taiwan

TAIEX

11429.94

-105.83

-0.9

India

Sensex 30

33780.89

242.52

0.7

*Markets closed

Note: all releases are listed in local time.

Important Information

Econoday Inc. is a US company that provides financial commentary and indicators to industry professionals. All information provided and views expressed are those of Econoday. Reference in this document to specific securities should not be construed as a recommendation to buy or sell these securities, but is included for the purposes of illustration only. Past performance is not a reliable indicator of future results. The value of investments can go down as well as up and investors may not get back the amount invested.