Market Commentary – June 29, 2020

Kevin Jock

29th June 2020

    Headlines are dominated by new Covid 19 cases and impact, political tensions & concerns of economic recovery. Many U.S. states are considering pausing their reopening as Coronavirus cases reach 10 million globally with deaths topping 500,000 worldwide. 

     Asian Shares open lower to start the week on concerns surrounding the virus. USD gains strength early on. Chinese markets re-opened after a long weekend from Dragon Boat Festival. Last week saw a flurry of central bank announcements.

Figure 1 (Source Refinitic Eikon): XAU continues its tear higher towards 1,775

Headliner Review

  • The U.S Bureau of Economic Analysis released comments on important Personal Income/Spending data for the month of May 2020. “The decrease in personal income in May primarily reflected a decrease in government social benefits to persons as payments made to individuals from federal economic recovery programs in response to the COVID-19 pandemic continued”
  • The S&P 500 index has bounced back after hitting 3-year lows in March on back of the Federal Reserve’s stimulus package.
  • Japan’s May retail sales dipped by 12.3% in May. The economy saw a tumble of 13.9% in April.

Figure 2 (Source Refinitiv Eikon): S&P 500 index rebounding 40% from 3 year lows in March 2020


Up Next

     We have a short week with U.S. banks off Friday for Independence day. Italian banks are off today. Hong Kong, Canada, Russia are off Thursday.

     This week will see some big prints in a short period of time (specifically in US)-Fed Chair Powell testifies Tuesday, ISM manufacturing index is due Wednesday and U.S. payrolls are due a day early on Thursday. 

     Whilst recent economic data shows signs of economic recovery, market sentiment this week is expected to be risk-off continuing from last week’s action. Focus will be on the rate infections amongst develop nations as market participants will be on the lookout for signs from government officials with respect to reconsidering reopening plans or worst, a re-implementation of lockdown proceedings.

Headliners to watch

  • Coming out of the EU :
    • German Prelim CPI set to rebound MoM from -0.1% to 0.3%
    • Spanish flash CPI expect to remain at -0.9% YoY
  • Rebound bonanza:
    • UK mortgage approvals and inturn net lending expected to rebound from 16K to 25K and -6.9B to -4.0B respectively.
    • Canadian building permits expected to rebound to 10.3% from -17.1% as leading manufacturing inflation indicators, IPPI and RMPI posits reversals from -2.3% to 2.7 and -13.4 to 29.7% respectively.
    • US pending home sales anticipate one of the largest MoM increase to date. From consecutive percentage lows of -20% to 18.9%.
  • Keen interest on China manufacturing PMI. Currently just edged over 50 and expected to stay steady at 50.4. Disappointing figures would be dire market sentiment wise
  • Of miscellaneous speeches to note
    • RBA Deputy governor will be conferencing into the Economic Society of Australia speaking about RBA policy actions and balance sheet.
    • BOE Gov Andrew Bailey opening remarks at the Climate Financial Risk Forum.



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Antony Tan
Ben Li
Kevin Jock