Morning Update Note
Thursday 6th August 2020
- US stocks closed higher on Thursday, as initial jobless claims declined to their lowest level since the start of the pandemic.
- The Labor Department figures showed that jobless claims for the week ending August 1st fell 249,000 to 1.18m, representing an unexpected significant drop.
- This was despite US employers making another 262,649 job cuts in July.
- The Dow Jones Industrial Average rose 0.68%, to end at 27,386.98, while the S&P 500 gained 0.64% to close at 3,349.16.
- The Nasdaq Composite climbed 1.00% to end 11,108.07. 0.9%, to 7,712.95 after a late rally from tech stocks.
- Investors continue to wait for Washington to announce the next Coronavirus stimulus package, as the Trump administration and the Senate have still been unable to reach a final deal.
- US Coronavirus figures appeared to have improved on Wednesday, as the number of new cases fell 25.4% from the week prior. However, it was pointed out that the number of new tests was also 20.3% lower than the previous week.
- In equity markets, the tech stocks of Apple, Microsoft, Facebook, Amazon and Netflix all finished higher to give the indices a boost.
- European stocks fell on Thursday, as investors awaited updates on further US government stimulus news.
- Latest figures from the Office of Federal Statistics revealed that German factory orders were up 27.9% from the previous month, well ahead of estimates of 10.1%.
- Italian industrial production for June was 8.2% higher than the previous month according to ISTAT. This was slightly behind consensus estimates of 9.0%.
- In London, the Bank of England kept rates on hold, and cautioned that the economic recovery would take longer than estimated.
- The FTSE 100 closed 1.27% weaker at 6,026.94 whilst the FTSE 250 was 0.90% weaker at 17,479.38.
- The Pound traded 0.37% higher against the weakening dollar to $1.3163 and gained 0.18% against the Euro to €1.1074
- In corporate news, Glencore fell 8.08% as it scrapped its deferred $2.6bn dividend to try shore up its balance sheet as falling commodity prices and the pandemic saw half-year profits fall.
- Serco plummeted 15.17% despite announcing a 53% profit rise attributed to increased government demand and purchase of a US naval systems unit in the previous year.
- Broadcaster ITV closed 3.94% higher despite announcing that profits for the first half of the year were almost wiped out by the pandemic due to increased costs and falling revenue. Pre-tax profit dropped to £15m from £22m year-on-year as revenue was 17% lower to £1.45bn in the first half of 2020.
- Packaging company Mondi gained 3.12% as management decided to resume paying its dividends due to the company being in a strong financial position despite falling revenue for the first half of the year due to softer pricing.
- Insurer Aviva gained 4.64% on the day as it reinstated its dividend.
- Asian markets were largely lower in early Friday trading, as ongoing US-China tensions and growing Coronavirus cases in South-East Asia continue to worry investors.
- In Japan, the Nikkei 225 was down 0.49%. Toyota shares however gained 1.16% following a good trading update revealing that the company had managed to stay profitable during the period April to June despite falling sales. Nintendo also gained 2.3% as it announced a surge in profits as people look to purchase game software for home entertainment during the Covid-19 pandemic.
- South Korea’s Kospi edged higher by 0.38%.
- Hong Kong stocks shed a further 1.64%, with WeChat maker Tencent falling 4.50% as President Trump signed an executive order which suggests a ban on US companies conducting business with them from mid-September.
- Chinese equities suffered a slow start, with the Shanghai Composite losing 1.19%.
- 10yr and 30yr US treasuries are currently trading at 0.52% and 1.18% respectively.
- 10yr UK gilts trade with a yield of 0.10%.
- German 10yr bund yields trade at -0.52%.
- 10yr Italian and Spanish bond yields trade at 1.00% and 0.28% respectively.
- The WTI crude oil price is $41.92
- Brent crude is $45.07
- The gold price is $2,072.80
- The silver price is $28.89
- The COMEX copper price is $2.89
- The Yen is trading at 105.54 against the US dollar.
- The pound is trading at 1.31 against the US dollar.
- The pound is trading at 1.11 against the Euro.
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