Market Commentary – July 6, 2020

Kevin Jock

6th July 2020

Figure 1 (source IS Prime): IDX.HK.50 rallies higher to values last seen in March.


Asian shares scaled four-month peaks on Monday as investors counted on super-cheap liquidity and fiscal stimulus to sustain the global economic recovery, even as surging coronavirus cases delayed re-openings across the United States. Reuters reports.

Headliner Review

  • It was quiet over the weekend as US markets closed due to US Independence Day last Friday.
  • Services PMI continues to rebound as a sign of stabilization in the region.
    • China Caixin Services PMI rises from 55.0 to 58.4
    • EU Final Services PMI increases from 47.3 to 48.3
    • Spanish Services PMI rebounds from 27.9 to 50.2
    • Italian Services PMI rebounds from 28.9 to 46.4
    • French Final Services PMI increases from 50.3 to 50.7
    • German Final Manufacturing PMI increases from 45.8 to 47.3
    • GBP final Services increases from 47.0 to 47.1
  • European Central Bank said the euro zone faces the downward pressure to the coronavirus recession. It is expected to see a turnaround as the coronavirus crisis would speed up the transformation of the economy.


Up Next

     Key monetary decision coming out of Australia amid resurgence in Coronavirus cases in Victoria. Daily records have been broken, hotspot suburbs back in strict lockdown and rising, with bordering state NSW set to close shared borders Tuesday night. All of which throws a wrench in an already fragile recovery. Interest rates nailed to the floor and expected to remain there. Debate however surrounds whether it’ll be a U-shape or W-shape recovery, with the latter more likely given recent news, and further exasperated when temporary employment benefits end in September. Only winners (or least losers) thus far have been mortgage holders, gifted a once in a lifetime chance to re-finance rates at record lows, of whom nevertheless rely heavily on a strengthening labour market. Even in this aspect, recent unemployment figures have been dire.


  • Focus will be on US ISM Non-Manufacturing PMI expected to teeter on 50.0 from 45.4. Not yet out of the woods, but enough to elude contraction. Volatility is expected if announced figures exceed market consensus.
  • Canadian Summer Business Outlook Survey will be released today. Previous consultations already reported weakening business sentiment even before COVID-19 intensified, most impactful in the energy sector from falling oil prices. Expect a shift in today’s report as oil prices have rebounded. Overall business confidence likely to take a step back, from weaker employment demand to mute price growth.
  • Joining the record-breaking party Euro retail sales expects 180 turnaround from -11.7% to 15.0%


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Antony Tan
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Kevin Jock