Market Commentary – July 1, 2020

Kevin Jock

1st July 2020

     Day one of Q3 is underway. Increasing coronavirus cases shadow improving economic data in the U.S. Asian Shares see little movement. Hong Kong takes the day off for special administration public holiday.

     As mentioned in yesterday’s post, today marks the first day of the Chinese Parliament launch of the new Hong Kong security law that will increase Mainland’s control over the region.

Figure 1 (Source IS Prime): IDX.JP.225 trades lower intraday, struggles to find footing

Headliner Review

  • BoJ Tankan surveyed in June were overall weak, reflecting the economic contraction
  • US Indices continue to surge on ahead shrugging off worrying cases of infection and extraordinary economic uncertainty as remarked by Federal Reserve Chairman Jerome Powell last night. Grilled by the House Committee, the Fed Chair consistently reaffirmed maintaining interest rates until maximum employment and price stability goals are achieved. Key though, alongside monetary stimulus is commitment from ‘all levels of government to provide relief and support…for as long as needed’.
  • American’s strong in confidence seemingly unfazed by current standings as consumer confidence rose to 98.1 beyond forecasts of 91.6. Easing of lockdown rules and businesses re-opening left many upbeat however new cases of resurgence on the West Coast and in the South may dampen future moods.
  • Canadian GDP posting figures better than expected but not out of the woods yet. Figures reveal consecutive months of historic contractions from -7% to -11.6%. Optimism surrounds coming months’ figures as preliminary GDP notes a potential 3% increase. However final figures are susceptible to revision before release.
  • EU surprises with flash inflation rate up 0.3% beating disinflation expectations of 0.1%. With food, alcohol and tobacco contributing most as energy declines.


Up next

     The day is dominated by a flurry of PMI data out of Australian, Japan, Europe, Sweden, Norway and the U.S. The Riksbank meeting will also be key to watch. ECB, BoE and Fed speeches have potential to draw headlines. U.S. banks off Friday for Independence day. Hong Kong Banks are off today. Canada & Russia are off Thursday.


  • Today brings FOMC Meeting Minutes to the spotlight. On the face of it, Fed’s Powell in publics’ eye has stood strong on existing narratives to maintain low rates. Of interest though is whether other members are curious in exploring further bond purchasing programs to keep yield curves in check.
  • Keen eyes eagerly await ADP Non-farm employment change today. Market analyst predict an overwhelming buoyant recovery with not only positive numbers but a historic number of people employed MoM at 2.85M.
  • Across the board manufacturing PMI seen continuing rebounds from previous months low with Germany and French remain unchanged.
  • Spanish PMI : 38.3 to 45.2
    • Italian PMI : 45.4 to 47.9
    • Swiss PMI : 38.3 to 45.2
    • UK PMI : 50.2 to 50.1
    • US ISM PMI : 43.1 to 49.5
  • Crude oil inventories set to decline to -0.9M from 1.4M
  • miscellaneous notes
    • Hong Kong on holiday as today marks the day sovereignty was transferred from UK back to China. 4,000 riot police will be deployed across the aisle as protests are expected from Chinas’ new securities law being implemented today.
    • Canada on break as Canadians celebrate Canada Day. Parades, festivals and fireworks to be expected.


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Antony Tan
Ben Li
Kevin Jock