Thursday’s market minute
- Global stocks are falling as coronavirus infection levels remained high in the US and investors pulled up stronger GDP data than expected in China.
- GDP in China in the second quarter rose by 3.2%, but retail sales in June fell for the fifth month in a row, underlining the fragility of the world’s second largest economy.
- US infections increase by 67,100, the second highest on the record, and take the total number of a total of 3.5 million when states consider reopening plans.
- US retail sales increased by 7.5% in June against a market forecast of 5.2%, while unemployment claims remained stable at 1
- European equities are weaker following the ECB’s interest rate decision, while the dollar is edging higher as traders take a cautious stance on Thursday’s session.
- US stock futures point to a weaker open on Wall Street after results from Johnson & Johnson, Morgan Stanley and Bank of America.
Wall Street futures fell lower on Thursday, while the dollar fell back and oil prices fell as markets reacted to mixed economic data from China, tensions between Washington and Beijing and coronavirus infection levels in the United States.
U.S. retail sales for June increased 7.5% year-on-year, the Department of Commerce said, a profit that matched record-breaking data for the past month. Unemployment claims for the week ended July 11 were kept at 1.31 million, however, which indicates that stopped reopening plans may increase unemployment.
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 disappearing this week as new cases peaked at 67,300 yesterday, according to CDC data, and state governors continue to pause or reverse reopening plans.
Stronger bank revenues than expected, but also hopes for fresh fiscal stimulus from Washington and a short-term breakthrough in vaccines have kept markets high for most of the month, pulling the S&P 500 into a whispering positive territory for the year after the end of the evening.
Better-than-expected GDP data from China this morning, which showed the world’s second-largest economy recovered by 3.2% in the three months to June, could have added to that optimism, but investors were worried about the fifth month in line in retail Sales in June, as well as the worrying rise in tensions between Washington and Beijing, which will include additional travel sanctions for senior executives, are more restrictions on the type of business Huawei Technologies can do with U.S. companies.
With a handful of bank and blue-chip revenues scheduled for Thursday, and the European Central Bank making no change to either the policy rates or its quantitative easing program of 1.35 billion euros, traders who decidedly cautiously look into the opening clock after the weaker-expected weekly data on unemployment claims.
Contracts tied to the Dow Jones Industrial Average, which is up 4.1% for the month of July, are the price for a retreat of 210 points while those linked to the S&P 500, which is only 0.13% during the year, suggest a opening of 24.5 points clock decreases.
The broader market insurance helped lift the US dollar index, which measures the greenback against a basket of six global currencies, and pushed benchmark 10-year Treasury Note returns moderately lower, to 0.609%, in overnight trading.
Dollar power, as well as OPEC’s decision to reduce its production cuts by 2 million barrels per day, to 7.7 million, as of August, pulled global oil prices lower, although the decline was limited by data from the Ministry of Energy yesterday which showed a larger the decline in US commodities by 7.5 million barrels last week.
WTI contract for delivery in August, the US benchmark, traded 52 cents lower from their Wednesday closing in New York and changed hands to $ 40.68 per barrel in early European business while Brent contract for August, the global benchmark, saw 38 cents lower to $ 43.41. per fat.
European equities were also on the back side after the ECB interest rate decision at 07:45 Eastern time, held back by weak second-quarter earnings for regional blue-chips and the lame retail data from China.
The Stoxx 600 benchmark index fell 0.6% after trading after the day, with a 0.55% image for Germany’s DAX performance index and a 0.4% slip for the FTSE 100 in London.
Overnight in Asia picked up China equities and fell the most in five months, as the stronger-than-expected second-quarter GDP recovery boosted the outlook for slowing government stimulus, which has played a major role in the domestic market’s rebound after the coronavirus.
China’s Shanghai Composite fell 4.5%, while the technology – focused CSI300 in Shenzhen fell 4.8%, dragging markets around the region and pulling MSCI’s ex-Japan benchmark to a decline of 1.75% over the last trading hours. Japan’s Nikkei 225, meanwhile, closed 0.76% lower at 22,770.36 as Tokyo relied on a possible outbreak of coronavirus infections.