Market Commentary – July 15, 2020

Kevin Jock

15th July 2020

     Wall Street trades higher on a potential COVID-19 vaccine whilst US banks set aside $28bn in preparation for current and future loan losses. The vaccine still in early testing phases and loan loss forecasts optimistic in outlook. Bank executives from three of the largest US banks JP Morgan, Wells Fargo, and Citigroup stress the biggest forthcoming risk is uncertainty. With respect to containing the second wave, whether additional fiscal and monetary stimulus will be implemented.

Headliner Review

  • Singapore’s economy plunged into recession with a record 41.2% GDP drop after the extended lockdown, which has a huge impact on the business and retail spending in the country. It is the biggest quarterly drop in record and worse than the expected 35.9% drop.
  • California pulls back most of the economic reopening measures as the coronavirus outbreak in the US rapidly increase. California Government ordered the closure of indoor operations of restaurants, bar, theaters and number of other venues. The government also banned private indoor gatherings with more than 10 people. The new round of restrictions echoes the early days of the coronavirus pandemic.
  • Donald Trump last night ordered to end Hong Kong SAR’s special trade status and signed into law an act that authorizes sanctions on banks over China in the international finance hub. Trump said, “The order means that Hong Kong will now be treated the same as mainland China. No special privileges, no special economic treatment, and no export of sensitive technologies.”



Prepare for a raft of macroeconomic announcements in the coming day.

  • Since taking over in June. Today marks’ Tiff Macklam first policy decision as Bank of Canada’s governor. Whilst rates are expected to stay low market consensus leans towards further quantitative easing as Macklam’s first decision to set his narrative. Though concerns have been raised as the Central Bank is becoming the governments main financier.
  • New Zealand and South Africa set to produce falling CPI figures as the impact from lock down continues to reverberate in economic figures. Consumer prices in New Zealand to decline -0.5% last quarter, a level unseen since the GFC. South Africa to slow to 2.2% MoM whilst market consensus for Argentina rises to 1.8% from 1.5% on the back of an ever-depreciating peso.
  • All eyes on crude oil inventories with Saudi Arabia and Russia in talks of cutting a further 2 million barrels a day. Despite an incohesive OPEC agreement in cutting production, reluctance to cut from smaller member states have been overshadowed by drastic supply reduction from the likes of Saudi Arabia, UAE and Kuwait.
  • China back on track as markets expect a 2.2% QoQ GDP. Considered as the epicenter for the Coronavirus, last quarters detour saw China contract -6.8%. A historical first. Nevertheless by implemented extreme containment measures, it has allowed China to become the front-runner on the road to recovery.
  • Coming out of Australia, employment figures will see Aussie’s attempting to enter back into the labour force as the economy opens back up. 106K expected to find jobs with unemployment rate rising to 7.2%
  • In stark contrast to the US, Russian MoM industrial production figures still in decline though recovering to -7.9%. As the US, already bouncing back, expected to post a 4.5% increase. Second positive month in a row.



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Antony Tan
Ben Li
Kevin Jock