Market Commentary – July 3, 2020

Kevin Jock

3rd July 2020

     Wall street rallied Thursday on back of strong jobs data. Asia shares also seen on the rise. US data put pressure on gold.  In currencies, the Kiwi was top gainer against the USD. the Aussie dollar followed close behind. SEK and NOK trailed in the G10. ZAR and TRY saw little action.


Figure 1 (source Refinitiv Eikon): Nasdaq 100 index yearly chart.  Forerunning global markets Nasdaq settles at historic highs as technology firms shown to be immune from the fallout that is the Coronavirus crisis. Evident from the current crisis is the widening gap in dual economies between tech and the harder hit traditional manufacturing & services.


     Better than expected Non-farm payrolls and unemployment data out of the U.S shows that the economy was well on its way to recover, however any positive figures remain shadowed by increasing number of new covid19 cases. There are currently 17 candidates undergoing clinical trials for a new vaccine. Promising preliminary results may well be in the headlines within the next month or two. 

Figure 2 (source Source: Johns Hopkins CSSE):New confirmed coronavirus cases in U.S. Seven day rolling average of number of confirmed cases.


     The Russian referendum vote concluded yesterday, which consisted of around 200 constitutional changes. Key take aways are that President Putin will be allowed to serve two more terms, effectively allowing him to keep power until 2036 and the referendum has defined marriage exclusively as a union between a man and a woman. 


Headliner Review

  • There is an early Non-Farm payroll released as Friday is US Independence Day. Non-Farm payroll increases from 2.7 million in May to 4.8 million in June, which is much better than the expected. The 2.1 million gain in June is the largest gain in month in US history. The unemployment rate drops from 13.3% to 11.1%.
  • Except the rise of in the number of jobs, many people are still losing jobs. The unemployment claims decrease from 1.48 million to 1.42 million, but it is still a very high number.
  • Average Hourly Earnings m/m decreases from -1% to -1.2%, which is worse than expected. It is likely that those low-paid works are starting to return to work.
  • From the reports of labour market in the US, it is expected that the economy is recovering from the disruption of a global pandemic.


Up Next

     Anticipate muted markets today as the United States break early for 4th of July fireworks. However, brace for coming volatility in the week ahead as rhetoric between the nations across the Pacific intensify. Tit for tat, US senate responds to China-HK securities law by passing their China-Sanction bill specifically punishing Chinese officials and business whom assist China in restricting Hong Kong’s autonomy.

     Though positive US employment figures offer support in the case for a US indices bull markets, layers of uncertainty from continuing rise in Coronavirus cases and the eventual end of favourable unemployment (in July) may be cause for concern.


  • Out of the EU today expect a deluge of services PMI roaring back from gloomy depths as continued easing of lockdown restrictions help pull nations out of their economic slump.
    • Spanish PMI from 27.9 to 46.0
    • Italian PMI from 28.9 to 46.9
    • French PMI from 31.1 to 50.3
    • German PMI from 45.2 to 45.8
    • Euro PMI from 30.5 to 47.3
    • UK PMI from 29.0 to 47.0
  • ECB President Christine Lagarde is due to speak about alternative growth models. Recent remarks iterating with the coronavirus crisis, a return to status quo is unlikely even as economies rebound rather how nations grow in the future has been transformed.



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Antony Tan
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Kevin Jock