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Contents
Click on the links below to get to the stuff you really really want.
USA – Stocks started higher but were soon dragged back down by heaps of awful economic data
UK – Rising oil prices and improved house builder stocks lifted equity indices; But PMI data are impossible to ignore
Continental Europe – More dreadful data here too; The ECB has adjusted its rules so that Italy and the like are not stranded
Elsewhere – Bank of Japan appears set to add more stimulus; Stocks down
WTF – Kim
Links
Numbers
Ts & Cs
USA
Stocks started higher as oil prices continued their tentative recovery and hope continued to drive decision-making. But as the day wore on, data set after data set came in pushing sentiment and stocks down. The S&P 500 closed the day 0.1% lower.
Those data included the following:
- Covid-19 cases – nearly 850,000 in the US
- US deaths – 47,681
- Unemployment claims – up by 4.4 million
- Total unemployment claims – more than 26 million
- Composite Purchasing Managers’ index – down to 27.5 (below 50 indicates expected contraction)
- Factory activity down to 36.9 – its lowest level since the financial crash
Domino’s Pizza beat profit expectations though. Yay.
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UK
Stocks in the UK rose despite some of the dire data coming out. The FTSE 100 and FTSE 250 added 1.0% and 1.3% respectively, with the rising value of the pound holding back gains on the former. The continued rise in oil prices helped to lift the mood with house builders also posting gains.
But those data are difficult to ignore. The composite purchasing managers’ index or PMI (including the immediate outlook for services, manufacturing and construction) slid to the lowest I’ve ever seen: 12.9. The consensus expectation was for 31.4. So much for that. Bear in mind that the PMI range is between 1 and 100, where above 50 indicates expected growth. I’ve never seen it go below the mid-40s and people would normally stress about it being one or two points below 50. We’re in a different world and investors are chomping at the bit to ignore the data and focus instead on lockdowns being lifted and cures being created.
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Continental Europe
European stocks posted modest gains leaving the Euro Stoxx 50 and German DAX 0.6% and 0.9% higher respectively by the close of trading yesterday. Oil-related stocks were on the up, but it was all about the data yesterday.
The eurozone composite PMI fell to 13.5 within which, the services PMI tumbled to 11.7. That’s horrific. The reality of the lockdown is hitting home in numeric form. It’s been enough for the European Central Bank to adjust its rules to allow it to continue to lend to countries with below-investment grade credit status i.e. countries that are slightly or utterly buggered, namely Italy, Spain and Portugal.
By way of explanation, Italy’s Prime Minister, Giuseppe Conti, has announced a further €50 billion in spending this year. He’s going to have to issue government bonds to pay for that and, now that the ECB has adjusted its rules, Italy might not be quite so poleaxed by the interest rates it’ll have to pay on any money it borrows (it being such high risk to lend to).
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Elsewhere
The Bank of Japan appears to be gearing up to provide a whole heap more financial stimulus. Japan will need it because the export-focused country already has financial stasis and a growing number of virus victims. Stocks in Japan and across most of the rest of the Asia Pacific region are down this morning as investors react to the economic data that have been published.
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WTF (What’s The Fact?)
Kim
“Where does Kim Jon-un buy his DIY? Home Despot.”
Courtesy of Bob Phillips
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Links
Investopedia – Loads of free explanations of financial terms including some helpful videos. Not 100% accurate, but a good starting point
Guffipedia – Lucy Kellaway of the FT has collected some painful examples of corporate people disappearing up their own analogies
Guardian – Free to access website with a couple of decent columnists (e.g. Nils Pratley and Larry Elliott)
Times of India – Why use five words when 37 will do?
Daily Mail – Click it. I dare you.
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IMPORTANT
This is my opinion. Yes I read a lot and share what I’ve read with you, but this content remains my
opinion. It’s NOT advice. If you take my advice – don’t take my advice. Any decisions you make about investments, your hairstyle or whether or not to eat marzipan are entirely at your own behest. If you are too stupid to recognise the devil’s ear wax when you see it, then you’re on your own.
