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On 25 June 2020 - Global shares: Financials lead US higher; Europe up on ECB move; Asia mixed

Anne D Picker

Anne D Picker - Econoday

Banks rise on rollback of Volcker rule restrictions but Covid cases in focus

US markets

Banks led US equities higher Thursday after the Federal Deposit Insurance Commission eased Volcker rule limits on bank risk-taking. Equities tacked on more gains in the final hour of trading. The Dow Jones industrial index rose 1.2 percent; the S&P 500 gained 1.1 percent, and the NASDAQ was also up 1.1 percent.

Despite the gains, sentiment remained wary amid more negative news about accelerating rates of new Covid-19 cases. Texas suspended its reopening plans and said its intensive care units were at capacity. Markets noted high-frequency data, including ride-sharing and restaurant reservations, that show slowing consumer activity in heavily-populated states where the Covid-19 cases have risen sharply.

Citigroup was up 3.7 percent and JP Morgan up 3.4 percent on the FDIC news. Apple managed to rise 1.3 percent despite spooking the market by saying it would re-close its Florida stores due to the pandemic, in addition to closures in Texas, North Carolina, and other southern states. On the downside, Disney fell 0.6 percent after delaying reopening its Disneyland resort in California.

Among sectors, energy stocks rose with oil prices on strength in supermajors and exploration & production companies, with Haliburton leading, up 4.9 percent. Technology shares matched the S&P 500 gain, with support from Accenture, which rose 7.7 percent after an earnings beat and cost-cutting announcement. On the downside, consumer discretionary was depressed by weakness in homebuilders, retailers, and apparel. Utilities lagged the most.

In US economic data, jobless claims fell 60,000 in the June 20 week but the 1.480 million level was 100,000 above Econoday's consensus. Since mid-March when virus effects first took hold, 47.5 million initial claims have been filed. More bad news came from trade data that showed deep contraction for exports, down 5.8 percent on the month, and a sharp rise in the goods deficit to $74.3 billion. In positive news, new durable goods orders bounced back a sharp 15.8 percent in May led by large outsized gains for vehicles and aircraft.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$1.32 to US$41.39, while spot gold fell US$1.85 to US$1,763.31. The US dollar was little changed against most major currencies. The US Treasury 30-year bond yield was unchanged at 1.44 percent while the 10-year note yield was unchanged at 0.68 percent.

European markets

German economic data and support from the European Central Bank gave equities a lift Thursday. The Europe-wide STOXX 600 and the German DAX both rose 0.7 percent, the French CAC gained 1.0 percent, and the UK FTSE-100 was up 0.4 percent.

Risk assets recovered from early declines after the ECB surprised the market by announcing a new backstop euro funding facility for banks outside the Eurozone. German data helped, with the GfK survey reporting consumer sentiment rebounding following its dramatic slump in April/May. The overall climate indicator rose from minus 23.1 in May to minus 18.6 in June and is expected to increase further to minus 9.6 in July.

Gains were limited, however, by worries over rising Covid-19 cases in the US, and focus on hotspots in Brazil, India, Germany, and Japan.

Among sectors, best performers included autos, banks, insurance, telecom, chemicals, and personal & household goods. Lagging were travel & leisure, real estate, media, food & beverage, technology, industrials, and retail.

Autos advanced with VW and BMW  both up 2 percent. Wirecard, the financial services company, dropped another 70 percent after filing for bankruptcy.

Asia Pacific markets

Markets in China and Hong Kong were closed for a holiday Thursday. Most markets elsewhere in the region closed down, with concerns about the potential for a second wave of Covid-19 in some parts of the world again a major focus, and investors also reacting to a downgrade to the global growth outlook by the International Monetary Fund.

Australia’s All Ordinaries index was the weakest performer in the region, closing down 2.5 percent after authorities reported another spike in new Covid-19 cases in Australia’s second largest city, Melbourne, while Japan's Nikkei and Topix indices both fell 1.2 percent.

New Zealand's merchandise trade surplus narrowed from NZ$1,339 million in April, the largest monthly trade surplus on record, to NZ$1,253 million in May. Exports of goods fell 6.1 percent on the year in April, down from a 3.5 percent decline in April, with weakness broad-based across major categories of exports and major trading partners. Imports of goods slumped 25.6 percent on the year in May after a revised decline of 22.8 percent in April, largely driven by lower global oil prices.

Japan's all industry index fell 6.4 percent on the month in April, weakening further from a decline of 3.4 percent in March. On the year, the index was down 11.8 percent after dropping 5.1 percent previously. These data are broadly in line with previously published indicators showing the impact of the Covid-19 pandemic on Japan's economy worsened in April.

Looking forward

On Friday in Asia/Pacific, the Singapore industrial production report is due. In Europe, Eurozone M3 money supply and Italian business and consumer confidence reports are on tap. In North America, personal income and outlays, and consumer sentiment reports are scheduled.

Global stock markets

 

Index

25 Jun 2020

Daily Change

% Change Daily

North America

United States

Dow

25745.6

299.66

1.2

 

NASDAQ

10017

107.83

1.1

 

S&P 500

3083.76

33.43

1.1

Canada

S&P/TSX Comp

15446.14

151.76

1.0

Europe

UK

FTSE 100

6147.14

23.45

0.4

France

CAC

4918.58

47.22

1.0

Germany

XETRA DAX

12177.87

83.93

0.7

Italy

MIB

19234.75

71.77

0.4

Spain

Ibex 35

7270.3

74.80

1.0

Sweden

OMX Stockholm 30

1660.96

18.05

1.1

Switzerland

SMI

10089.83

67.84

0.7

Asia/Pacific

Australia

All Ordinaries

5927.98

-153.57

-2.5

Japan

Nikkei 225

22259.79

-274.53

-1.2

 

Topix

1561.85

-18.65

-1.2

Hong Kong

Hang Seng

*

*

*

S. Korea

Kospi

2112.37

-49.14

-2.3

Singapore

STI

2590.15

-38.47

-1.5

China

Shanghai Comp

*

*

*

Taiwan

TAIEX

*

*

*

India

Sensex 30

34842.1

-26.88

-0.1

*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.