Market Commentary: Re-infection fears spook investors

StockFanatic

Publish date: Thu, 18 Jun 2020, 03:06 PM

· Gains in US equities fizzled as investors weighed an increase in coronavirus cases against optimism about stimulus measures.

· The numbers of new cases are rising sharply in about six US states, according to a Reuters analysis, and authorities in Beijing have ramped up mobility restrictions in their efforts to contain a new Covid-19 outbreak.

· The Dow Jones Industrial Average fell 170.37 points, or 0.65%, to 26,119.61, the S&P 500 lost 11.25 points, or 0.36%, to 3,113.49 and the Nasdaq Composite added 14.67 points, or 0.15%, to 9,910.53.

· US Federal Reserve Chair Jerome Powell wrapped up two days of congressional testimony, during which he urged Congress not to pull back too quickly on federal relief for households and small businesses amid increasing debate over whether to extend temporary programmes that were put in place to shield them from the pandemic.

· The smell of trade fiction is in the air, as the US pulled out of international talks over a new digital tax framework for tech companies. Steven Mnuchin made the decision after failing to reach an agreement with countries looking to place levies on the revenue of American firms. European countries need to be wary of retaliatory measures if they press ahead with their own taxes.

· Donald Trump signed a measure punishing Chinese officials for imprisoning more than one million Muslims. The law, which won bipartisan support in Congress, requires the president to sanction anyone found responsible for oppression.

· On the economic front, while housing starts increased at a slower-than-expected pace in May, US building permits saw a more robust rebound and applications for loans to purchase homes surged last week to a near 11½-year high last week.

· OPEC presented a bearish outlook, saying fuel demand will remain under pressure in the second half. A gradual recovery in the global economy won't compensate for the slump in the first half. The cartel cut its crude supply estimate for this quarter by 2.17 million barrels a day, with overall output falling by 6.3 million barrels a day last month to 24.2 million. A delegate said OPEC+ implemented 87% of its pledged cuts in May and the coalition is due to hold an online meeting Thursday to review the deal.

· Asian markets closed mostly higher yesterday, but investors will have plenty on their plate as Thursday grinds on.

· New Zealand entered recession for the first time in almost a decade as the coronavirus pandemic began to bite in the first quarter. Gross domestic product fell 1.6% from the fourth quarter.

· Australia is forecast to say its jobless rate rose to 6.9% and Bank Indonesia is projected to carry out a 25bp cut to its key rate. Taiwan is seen cutting its rate to 1.0%.

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