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Top 5 Things to Know in the Market on Monday, July 6th

2020-07-06 17:58:38

1. China's retail investors pile in

China’s benchmark stock index rose by the most in over a year on a wave of retail investor buying encouraged by state-owned media.

The Shanghai and Shenzhen Shanghai Shenzhen CSI 300 rose 5.7% to close at its highest level since May 2015, after the Chinese Securities Journal spoke of the need to foster a “healthy bull market” in domestic stocks.

The comments come against the background of threats to Chinese companies’ listings in the U.S. from the bubbling trade and geopolitical conflict between the two countries, something that seems likely to increase Chinese companies’ dependence on the domestic capital market in the medium term.

It’s less than five years since the last dramatic bubble in Chinese equities, a bubble that was likewise inflated by a combination of retail investor enthusiasm and strong state messaging.

2. Dominion, Duke throw in the towel on Atlantic Coast pipeline; Buffett swoops

Dominion Energy Inc (NYSE:D) and Duke Energy (NYSE:DUK) said they will abandon their plan to build the $8 billion Atlantic Coast pipeline underneath the Appalachian Trail, citing “the increasing legal uncertainty that overhangs large-scale energy and industrial infrastructure development in the United States.”

Dominion will also sell its remaining gas transportation and storage business to Warren Buffett’s Berkshire Hathaway (NYSE:BRKa) in a deal that values the assets at $9.7 billion including debt. The deal marks the end of a drought for Buffett, who has repeatedly complained about the lack of attractive valuations for U.S. companies in recent months.

Berkshire will also take a 25% in Dominion’s Cove Point LNG terminal, although Dominion will remain the largest shareholder.

3. Stocks set to open higher; Uber (NYSE:UBER) in focus on Postmates deal report

U.S. stock markets are set to reopen after the long weekend in buoyant mood, as the narrative of economic reopening continues to dominate the ongoing increase in coronavirus infection rates across the south and west of the country.

By 6:30 AM ET, the Dow Jones 30 Futures contract was up 365 points or 1.4%, while the S&P 500 Futures contract was up 1.2% and the Nasdaq 100 futures contract was up 1.2%.

Among the stocks likely to be in focus Monday are Uber (NYSE:UBER), which was reported at the weekend to be close to buying meal delivery service Postmates in an all-stock transaction worth $2.65 billion. The deal is ostensibly to strengthen the position of UberEats, which CEO Dara Khosroshahi had made a central part of his strategy for the ride-hailing group.

4. Virus cases continue to surge, both in U.S. and globally

Florida and Texas both registered their highest daily numbers to date for new cases of the Covid-19 virus, but state politicians indicated they won’t close down the local economy again.

Texas reported 8,076 new COVID-19 cases Saturday, the first time it has crossed the 8,000 threshold, while Florida reported 11,458 new cases for the same day, also a record.

Florida reported Saturday that 14.1% of those tested for the virus were positive while for Texas the number was 13.1%. The World Health Organization, which registered a new global daily high for new infections at the weekend due to ongoing surges in south Asia and Latin America as well as the U.S., says that governments shouldn’t reopen business if that rate is above 5%.

5. Oil steady as Saudi hikes official selling prices

Crude oil prices were steady above the $40 mark as price signalling from Saudi Arabia, the world’s largest exporter, reinforced confidence that the physical market is approaching balance (despite high levels of crude in storage across the world).

Reuters reported that Saudi Arabia had raised its official selling prices for all types of its crude in August by $1, relative to the Oman/Dubai average.

U.S. crude futures edged down 0.2% to $40.58 a barrel amid concern at the relative strength of U.S. demand in the light of developments in Texas and Florida, while the international benchmark Brent was up 0.9% at $43.20 a barrel.

Top 5 Things to Know in the Market on Wednesday, July 1st

2020-07-01 19:48:26

1. California, Texas post new infection records

Texas reported a record-high 6,900 new coronavirus cases Tuesday, while California reported a new record high of 8,441, according to Reuters. The numbers amplify the warning on Tuesday from the U.S.’s top doctor Anthony Fauci that the country is losing control of the epidemic.

Fauci, head of the National Institute for Allergy and Infectious Diseases, said that the U.S. “is going in the wrong direction” and warned that new infections could top 100,000 a day. His words came ahead of the July 4th weekend, on which public events and family gatherings are set to pose heightened risks of transmission.

Fauci said around half of all new cases are currently coming from four states: California, Texas, Florida and Arizona.

A poll for CNBC showed that the virus’ progress was increasingly feeding through into negative ratings for President Donald Trump less than five months ahead of November’s election.

2. Europe improves at jobless surge eases

Europe’s economy showed further signs of improvement after its collapse earlier in the second quarter.

The composite IHS Markit purchasing managers index for the euro zone June was revised up to 47.4, while the index for the U.K. rose above the 50 level, suggesting that the economy has stopped contracting. The Bank of England’s chief economist Andrew Haldane, who had voted against increasing the bank’s bond-buying last month, also said the U.K. rebound is proceeding faster than expected.

In addition, the rise in German unemployment slowed sharply in June to only 69,000, well below expectations for a 120,000 rise. French auto registrations rose in year-on-year terms for the first time this year.

3. Stocks set to open lower; ISM eyed

U.S. stocks are set to start the third quarter on a negative note, as concerns about the spread of the virus – and a possible further chill in relations with China – dominate sentiment.

By 6:30 AM ET (1030 GMT), the Dow futures contract was down 161 points, or 0.6%, while the S&P 500 futures contract was down 0.5% and the Nasdaq 100 futures contract was down 0.3%.

The unease about risk assets is being reflected in the price of Gold, which advanced to a new eight-year high after closing above $1,800 for the first time since 2012 on Tuesday. By 6:30, it was at $1,805.65 a troy ounce, up 0.3% from Tuesday’s close.

Stocks in focus will include Constellation Brands (NYSE:STZ), brewer of the world’s most unfortunately-branded beer, and General Mills (NYSE:GIS), both of whom report earnings. The day's big data release is the ISM Manufacturing Index at 10 AM, which is expected to rise from 43.1 in May to 49.5 in June. There's also the ADP private payrolls report for June.

4. China cracks down in Hong Kong

Chinese police made their first arrests in Hong Kong under the new security law, which was enacted on Tuesday.

The law, which provides for life sentences against those convicted of subversion, sedition and terrorism, was imposed without being read in the city’s own legislature.

CNN reported around 70 arrests in response to protests that were relatively small by comparison with earlier pro-democracy actions before the coronavirus pandemic exploded.

5 Oil rebounds on rebalancing evidence

Crude oil prices regained some upward momentum after data showing a clear drop in exports in June from Iraq, the biggest over-producer in the OPEC+ bloc.

By 6:30 AM, U.S. crude prices were up 2.4% at $40.22 a barrel, while the international benchmark Brent was up 2.2% at $42.33 a barrel.

The mood was also helped by a much larger-than-expected draw in U.S. crude stocks – as reported by the American Petroleum Institute – which reassured traders that the process of market rebalancing hasn’t yet been derailed by the surge in U.S. Covid-19 cases.

The extent of the rebalancing was further illustrated on Tuesday – albeit with numbers that were largely of historical interest - as the Energy Information Administration said U.S. oil output had fallen in April to 12.06 million barrels a day, over 300,000 b/d more than it had previously estimated.

The government’s own inventory data for last week are due at 10:30 AM ET.

Top 5 Things to Know in the Market on Tuesday, June 30th

2020-06-30 17:41:08

1 China imposes Hong Kong law; U.S. retaliates

China’s top legislative body passed a new national security law tightening Beijing’s control over the formerly autonomous city.

The U.S. government responded by withdrawing the special status on trade that it had accorded to the city.

The news came on a day when the Chinese economy gave further proof of its recovery, with the official manufacturing Purchasing Managers Index rising more than forecast to 50.9, and the non-manufacturing index also rising to 54.4 from 53.6 a month ago. That was enough to push the price of copper above $2.70 a pound for the first time since January.

2. Powell, Mnuchin to testify as virus fears rise ahead of July 4 weekend

Federal Reserve Chairman Jerome Powell and Treasury Secretary Steven Mnuchin will address the House Financial Services Committee later, with Powell set to warn that an economic rebound cannot be taken for granted.

“The path forward for the economy is extraordinarily uncertain and will depend in large part on our success in containing the virus,” according to Powell’s prepared remarks, which were published by the Fed on Monday. “A full recovery is unlikely until people are confident that it is safe to re-engage in a broad range of activities.”

Powell’s warning comes as numerous states tighten their measures to contain the virus, threatening to complicate the coming July 4th celebrations. Counties in California and Florida have closed their beaches, while the states of Kansas and Oregon are imposing a requirement to wear masks in indoor public spaces – as is the city of Jacksonville in Florida, where the Republican Party convention is due to take place.

3 Stocks set to open mixed; Boeing's gains trimmed

U.S. stocks are set to open mixed on the last day of what is set to be their best quarter in over a decade.

By 6:30 AM ET (1030 GMT), the Dow futures contract was down 54 points, or 0.2%, while the S&P 500 futures contract was down 0.1% and the Nasdaq 100 futures contract was flat. The Dow underperformed partly because Boeing (NYSE:BA) stock was giving up gains in premarket on news of a big 737 MAX order cancellation from Norwegian Air Shuttle (OL:NWC).

The Nasdaq is, by contrast, being supported by strong earnings reported after the bell on Thursday by chipmaker Micron Technology (NASDAQ:MU) and computer hardware maker Xilinx (NASDAQ:XLNX).

U.S. data due include the Chicago PMI at 9:45 AM ET and the Conference Board’s consumer sentiment index for June at 10 AM.

4. Pound weakens at Johnson prepares to spend, spend, spend

The U.K.’s plans to re-open most of its economy this weekend took a knock as the government was forced to lock down the city of Leicester (pop. 330,000) in response to rising cases of the virus.

The U.K.’s stuttering exit from its state of emergency was also illustrated by the refusal of Greece on Monday to accept direct flights from the country for another two weeks.

Prime Minister Boris Johnson is set to give a keynote speech today on navigating a way out of the crisis by massively expanding spending on infrastructure and education.

The pound fell to a one-month low against the dollar and remained close to a three-month low against the euro.

5. Shell sees possible $22 billion hit; API Inventories due

Finding a way out of the corona crisis gets no easier for the oil and gas industry. After the collapse of shale pioneer Chesapeake Energy (NYSE:CHK) at the weekend, Anglo-Dutch major Royal Dutch Shell said it will write down its assets by between $15 and $22 billion in the second quarter, to reflect its expectations of a lasting hit to oil prices.

The company still stuck to its long-term forecast of $60 a barrel and $3 per million Btu for natural gas, but said it will take until 2023 for prices to return to this level. For the current year, it expects an average Brent price of $35 a barrel, rising to $40 next year.

The U.S. oil market will receive its latest update on U.S. crude supplies from the American Petroleum Institute at 4:30 PM ET.

Economic Calendar - Top 5 Things to Watch This Week

2020-06-28 18:58:10

1. U.S. virus cases surge
Five U.S. states, including Florida and Arizona hit record daily highs for coronavirus cases on Saturday and the number of confirmed U.S. cases of the virus rose to more than 2.5 million, a quarter of the world’s total, according to Reuters. The surge in cases has been most pronounced in a handful of Southern and Western states that were among the first to lift lockdowns.

The resurgence in cases is preventing economic activity from fully resuming, prompting investors to weigh expectations of further stimulus in the coming weeks.

One element of Congress' fiscal aid, a $600 per week supplement to unemployment insurance payments, is set to expire at the end of July.

“Our outlook for the economy is probably going to have to change" without further stimulus said Michael Wilson, chief U.S. equity strategist at Morgan Stanley.

2. June jobs report, ISM manufacturing data
Economists are forecasting that the U.S. economy will add three million jobs in June after a shock 2.5 million gain a month earlier. But the two months of gains would still pale in comparison to the approximately 22 million jobs that were lost in in March and April.

The ISM manufacturing index, out Wednesday, is expected to rebound sharply, but even if it rises back to the 50 level that separates growth from contraction the level of activity will still be down sharply from were it was at the start of the year.

Consumer confidence figures are due out on Tuesday and the weekly report on initial jobless claims will be released Thursday at the same time as the nonfarm payrolls data.

3. Fedspeak, minutes
Fed Chairman Jerome Powell and Treasury Secretary Steven Mnuchin are due to testify before the House Financial Services Committee Tuesday about the economic stimulus unleashed in response to the virus.

The Fed will publish the minutes of its June rate-setting meeting on Wednesday. Before that, New York Fed President John Williams will be speaking Tuesday on a panel with the International Monetary Fund while Fed Governor Lael Brainard is due to speak about the Dodd-Frank Act at a webinar co-hosted by the Brookings Institution and the University of Michigan.

4. Geopolitical tensions
This week could see a potential flare-up in U.S.- China tensions with Beijing due to pass new national security laws for Hong Kong.

U.S. Secretary of State Mike Pompeo said on Friday Washington was imposing visa restrictions on Chinese officials responsible for restricting freedoms in Hong Kong.

Last month, President Donald Trump responded to China's plans by saying he was initiating a process to eliminate special economic treatment that has allowed Hong Kong to remain a global financial center since its handover by Britain in 1997.

Concerns that an escalation in tensions between Washington and Beijing could jeopardize Chinese purchases under a Phase 1 trade deal Trump agreed with China in January have spooked investors already worried about a surge in coronavirus cases.

5. Bank of England speakers in focus
Investors will be closely watching appearances by Bank of England Governor Andrew Bailey and Chief Economist Andrew Haldane this week for any indications of a shift in monetary policy guidance after a surprise decision to taper the bank’s bond buying stimulus program.

The BoE bolstered its firepower by a further 100 billion pounds -- as predicted by most economists -- but surprised financial markets by saying it expected the increase to see it through to the end of the year.

The BoE’s decision to slow the pace of its huge bond buying program was accompanied by a comment from Bailey that he’d prefer to unwind the balance sheet ahead of raising interest rates -- a break from the Carney-era guidance that this process wouldn’t occur until interest rates hit 2%.

--Reuters contributed to this report

Top 5 Things to Know in the Market on Thursday, June 25th

2020-06-25 19:14:24

1. U.S. epidemic spirals out of control again

The U.S. recorded over 34,000 new cases of Covid-19, approaching levels last seen at the high point of the epidemic in April.

New York, Connecticut and New Jersey to impose a 14-day quarantine on visitors arriving from the worst-affected states, a new development given that the U.S. had only previously imposed such restrictions on arrivals from abroad.

Florida and Texas both reported record new case numbers, while officials in Houston said that the city’s intensive care facilities would be maxed out today.

The University of Washington in Seattle raised its forecast for the U.S. death toll to 180,000 by October from around 122,000 currently.

2. Jobless claims, GDP, Durable Goods data all due

The U.S. will present its weekly figures for initial and continuing jobless claims at 8:30 AM ET (1230 GMT), with the number of new claims again expected to have fallen only marginally to 1.30 million, from 1.508 million a week earlier.

Continuing claims are expected to have fallen below 20 million for the first time since April – but that was also true ahead of the previous week’s report.

The government will also announce revisions to its estimate of first-quarter gross domestic product. The number is of largely historical interest, given that the coronavirus barely touched the U.S. economy in March. Durable goods orders for May, to be released at the same time, will be more up-to-date information on the state of the economy, but will also be subject to high short-term volatility.

3. Stocks set to open mixed; Fed stress tests eyed

U.S. stock markets are set to open mixed after suffering their worst day since June 11 in response to the surge in Covid-19 cases across much of the country.

By 6:30 AM ET (1030 GMT), the Dow Jones 30 futures contract was down 106 points or 0.4%, while the S&P 500 futures contract was down 0.3% and the Nasdaq 100 futures contract was outperforming modestly, being up less than 0.1%.

Stocks in focus on Thursday will include the banks, who face the results of the Fed’s annual stress tests later in the day. The open question is whether the likelihood of a rise in bad loans due to the pandemic leads the Fed to impose restrictions on shareholder payouts and staff bonuses.

There will also be quarterly updates from JC Penney (OTC:JCPNQ), currently negotiating its way through Chapter 11 proceedings, and – after the closing bell – Nike (NYSE:NKE).

4. Wirecard succumbs, while Lufthansa accepts bailout

German payments company Wirecard said it had filed for bankruptcy protection, three days after admitting to a $2.1 billion hole in its accounts.

The move anticipated the likely cancellations of key partnerships with companies such as Visa (NYSE:V), Mastercard (NYSE:MA) and JCB after the exposure of what appears to have been massive fraud. Former CEO Markus Braun was arrested and released on bail earlier this week.

Wirecard, once a darling of both retail and institutional investors, had joined the benchmark DAX index in 2018, forcing out Commerzbank (DE:CBKG) in a what struck many as a sign of the times. It’s the first sitting member of the DAX to file for bankruptcy.

Another German ‘champion’, however, avoided the same fate on Wednesday as Lufthansa (DE:LHAG) shareholders swung behind a 9 billion euro government-sponsored bailout.

5. Risk-aversion pushes dollar high, commodities lower

The rise in risk-aversion prompted by the fears of a new wave of lockdowns pushed the dollar higher and commodities lower.

By 6:30 AM, the dollar index, which tracks the greenback against a basket of developed-market peers, was up 0.2% at 97.34, only 0.2% away from what would be its high for the month. However, its biggest gains came as bounces from oversold levels against the safe haven yen and Swiss franc.

U.S. crude oil prices, by contrast, fell 1.0% to $37.61 a barrel and are down some 7.5% from the highs they hit earlier in the week on hopes that the physical crude market is rebalancing. Brent futures fell 0.7% to hold just above the $40 a barrel mark.

Gold futures, meanwhile, fell 0.4% to $1,768.50, again underlining a higher correlation to risk assets as it assumes a greater part in leveraged retail portfolios that are susceptible to short-term pressure in equities.

Top 5 Things to Know in the Market on Wednesday, June 24th

2020-06-24 22:23:33

1. Virus surge raises risk of fresh lockdowns; EU mulls ban on U.S. arrivals

The rise in new Covid-19 infections in many states across the U.S. is gathering pace, raising the risk of renewed lockdowns to bring it under control again. Texas, Arizona and California all reported record numbers of new infections on Tuesday.

Some 29 U.S. states now have a reproduction rate (so-called R-number) of over 1, a level that ensures the virus spreads exponentially. Hospitalizations are also rising rapidly – a fact that undermines claims that rising infection rates are simply a result of broader testing.

In Europe later, ministers are expected to announce a ban on arrivals from the U.S.

The virus continues to spread rapidly across Latin America too, with Mexico also recording a record number of new infections and 793 deaths. The Honduran President Juan Orlando Hernandez, meanwhile, has been hospitalized and is receiving oxygen, according to reports.

2. Mnuchin talks up new stimulus package, tax deadline extension

U.S. Treasury Secretary said the administration is “seriously considering” another package of economic support measures and may extend again the deadline for filing 2019 tax returns.

“We want to take our time because, number one, there’s a lot of money we still haven’t put out, and, number two, we want to make sure whatever we do…is much more targeted to the businesses that are most impacted” by the virus, Bloomberg quoted Mnuchin as saying at a conference it organized.

The tax deadline has already been pushed back once from April to the end of July.

3. Stocks set to open lower; Winnebago in the spotlight

U.S. stocks are set to open lower, as investors finally take on board the threat of the rising tide of new infections.

By 6:30 AM ET (1030 GMT), the Dow Jones 30 Futures contract was down 270 points, or 1.0%, while the S&P 500 Futures was down 0.9% and the Nasdaq 100 futures contract was down 0.6%.

Of note later will be the latest update from Winnebago Industries (NYSE:WGO), whose stock has tripled on speculation that disruption to the travel business will spur demand for its recreational vehicles.

European stocks also turned sharply lower as fears that the U.S. could succumb to a second wave of infections outweighed a sharp rise in the German Ifo Business Climate index. The benchmark Stoxx 600 lost 1.7%.

With the exception of an isolated outbreak in the German meat-packing industry, infections have not risen noticeably in Europe since lockdown restrictions were lifted last month.

4. Gold hits 8-year high

The price of gold hit another eight-year high as the latest wave of coronavirus fears drove investors to place more bets on what is usually a haven asset.

By 6:30 AM, gold futures for delivery on the Comex exchange were up 0.7% at $1,794.80, after hitting an overnight high of $1,796.10 an ounce. Its latest rally has come at a time when other havens such as U.S. Treasury bonds have been relatively range-bound, reflecting the belief that gold is a better-value haven at a time when both nominal and real interest rates have tumbled.

Central banks around the world are still adding monetary stimulus where they can: the Bank of Japan, European Central Bank and Bank of England all increased their quantitative easing programs earlier this month against a backdrop of collapsing global growth.

The International Monetary Fund will later update its forecasts for the global economy in an update of its World Economic Outlook.

5. Crude gets the Covid-19 jitters; U.S. oil stocks eyed

U.S. crude oil prices caught the Covid-19 jitters, falling back below $40 on concerns that a new wave of infections will derail the current recovery in demand.

By 6:30, WTI futures were down 1.4% at $39.78, while the global benchmark Brent was down 1.0% at $42.19.

Prices have been under pressure since the American Petroleum Institute reported a 1.7 million barrel increase in U.S. crude stocks on Tuesday afternoon. The U.S. government’s official data are due at 10:30 AM. A rise of 300,000 barrels in crude inventories is expected.

Top 5 Things to Know in the Market on Tuesday, June 23rd

2020-06-23 20:00:19

1. This Chinese trade deal is not dead, it's resting

The U.S.’s trade deal with China is fraying. Trade advisor Peter Navarro told Fox News late on Monday that the deal was “over”, in a conversation that had previously mentioned Chinese backsliding on pledges to buy U.S. farm products and the general deterioration in Chinese-U.S. relations over recent months due to the Covid-19 pandemic and the situation in Hong Kong.

President Donald Trump had responded via Twitter that ““The China Trade Deal is fully intact. Hopefully they will continue to live up to the terms of the Agreement!”

The deal, signed in January, was the pretext for suspending tariffs on billions of dollars of Chinese imports in a move that appeared aimed at sparing U.S. consumers further pain in an election year.

2. Europe PMIs point to stronger than expected rebound

There was fresh evidence that Europe’s economy is stabilizing after the sharp drop in output due to lockdown measures in March and April.

HIS Markit’s composite purchasing managers’ index for the euro zone recovered to 47.5 in June from 31.9 in May, reflecting a big upward swing in output expectations and in business confidence. Indexes for France and the U.K. even made it above the 50 line that typically denotes growth.

However, the overall eurozone number indicates that the economy is still contracting, if at a slower pace. As such, it’s more reflective of a tick- or swoosh-shaped recovery than a V-shaped one.

That didn’t stop European stock markets from rallying to their highest in two weeks, Germany’s DAX rising 2.5% and the Stoxx 600 rising 1.5%.

3. Stocks set to open higher

U.S. stocks are set to open higher in the wake of President Trump’s intervention on the issue of the China trade deal. Whether or not the administration feels China is living up to its commitments, the positive reaction to Trump’s tweet suggests that the market is just content that it’s not calling Beijing out on the apparent backsliding yet.

By 6:30 AM ET (1030 GMT), the Dow Jones 30 Futures was up 226 points or 0.9%, while the S&P 500 Futures contract was up 0.8% and the Nasdaq 100 futures contract was up 0.6%.

In focus later will be T-Mobile (NASDAQ:TMUS), against the backdrop of Softbank’s decision to sell down its stake in the company following the merger with Sprint, a Softbank (OTC:SFTBY) portfolio company. Tesla stock may also attract scrutiny after another fatal crash in Germany that raised suspicions that its Autopilot software may have malfunctioned.

4. U.S. PMI, new home sales, Richmond Fed survey due

After the strong European numbers, IHS Markit will also publish a PMI for the U.S. at 9:45 AM ET (1345). While the survey isn’t as closely followed as the Institute of Supply Management’s, the two are rarely far apart in their findings.

In addition, there will be an update on the retail sector from Redbook Research at 8:55 AM, and May’s numbers for new home sales at 10 AM. The latter will be released at the same time as the Richmond Fed’s regional business survey.

5. Oil hits highest since March 3 on PMIs; API eyed

Crude oil prices hit their highest level in over three and a half months, after the China news and the European PMIs reassured traders about the future trajectory of global demand.

By 6:30, U.S. crude futures were up 1.7% at $41.44 a barrel, only marginally below the intraday high of $41.56 that was the highest mark since March 3. The global benchmark Brent was up 1.6% at $43.76 a barrel.

The American Petroleum Institute will release its weekly estimate of U.S. crude oil stocks at 4:30 PM ET.

Top 5 Things to Know in the Market on Monday, June 22nd

2020-06-23 19:53:01

1. New York gets back to work

Up to another 300,000 New York City residents will head back to work on Monday as the city enters phase 2 of its reopening in the wake of its battle with the Covid-19 coronavirus.

The new phase of reopening includes in-store retail, hair salons, offices, real estate, vehicle sales, rentals and leases, commercial building management and retail rental, repair and cleaning.

Mayor Bill de Blasio has approved restaurants to use sidewalks or kerbside parking spaces for outdoor dining, amid evidence that viral transmission is much lower outdoors. All establishments must still follow social distancing rules, with masks required of both staff and customers when they are within six feet of people.

New York was hit worse than any other part of the U.S. by the virus’ first wave, the worst affected region of the U.S., accounting for around one quarter of the 120,000 U.S. deaths recorded so far during the pandemic.

2. Virus recedes in Beijing, advances in LatAm and U.S. Sunbelt

New York isn’t the only place relaxing its Covid rules today. U.K. Prime Minister Boris Johnson is also expected to announce fresh measures to reopen the economy. In addition, the Chinese capital of Beijing reported only seven new cases of Covid-19 on Sunday, suggesting that its typically robust reaction to last week’s outbreak has had positive effects.

However, the virus hasn’t gone away. Brazil passed the 50,000 milestone for deaths at the weekend, while Mexico, which began reopening its economy last week, posted its second-highest daily number of new cases.

Across the U.S. ‘sun belt’ too, case numbers have continued to rise, with California, Florida and Texas all reporting over 4,000 new cases on Sunday.

At his first re-election campaign rally on Friday, President Donald Trump said he had told his aides to slow down the rate of testing for Covid-19, a comment that his aides subsequently played down as “light-hearted”.

3. Stocks set to open higher

U.S. stocks are set to open higher, with the reopening narrative dominating the second-wave fears that pushed major indices lower on Friday.

By 6:30 AM (1030 GMT), the Dow Jones 30 Futures contract was up 191 points, or 0.8%, while the S&P 500 Futures and Nasdaq 100 futures contracts were up in line.

Of interest later in the day will be Apple’s annual Worldwide Developer Conference, where the company is expected to confirm a move to make its own chips for the next generation of Mac computers. The meeting is expected to be overshadowed by a brewing dispute with app developers over the terms of access to its App Store.

The European Union last week opened an antitrust investigation into possible abuse of a dominant market position. That didn’t stop the stock hitting new all-time highs, however.

4. Wirecard fights for survival

One of Europe’s brightest tech hopes was fighting for survival on Monday after fresh disclosures about accounting fraud at the company over the weekend.

German payments company Wirecard said that some $2.1 billion of cash it had claimed to have on its balance sheet in trustee accounts in the Philippines had probably never existed.

The central bank governor of the Philippines said at the weekend that the funds had never entered the country’s payments system.

The company pulled its financial statements for the last year and warned it may have to do the same for previous years’ too. It’s still trying to persuade lenders not to terminate some $2 billion in loans, something that would likely push it into insolvency.

5. Oil consolidates as rig count hits new low

U.S. crude oil prices consolidated just below the $40 level, pausing for breath after last week’s rally amid lingering concern that a second wave of coronavirus infections could derail the recovery in oil demand.

By 6:30, U.S. crude futures were down 0.3% at $39.73 a barrel, while the global benchmark Brent was down 0.1% at $42.13 a barrel.

On Friday, oilfield services company Baker Hughes had said that the number of active oil rigs in the U.S. fell to its lowest in 11 years, strengthening perceptions of a cap on U.S. output in the near term.

Elsewhere on Monday, there were fresh indications of lingering overhang of supply, as India – one of the world’s largest importers - said it had filled its strategic petroleum reserve.

Top 5 Things to Know in the Market on Monday, June 22nd

2020-06-22 19:49:14

Top 5 Things to Know in the Market on Thursday, June 18th

2020-06-21 20:22:50

1. Jobless claims set to continue falling

The latest weekly set of jobless claims is set to be published at 8:30 AM ET (1230 GMT), at a time when a rise in new Covid-19 infections is raising fears of another wave of job-killing lockdown measures.

Analysts expect initial claims to fall to 1.30 million last week, which would be the lowest since the first lockdowns started to bite in late March, and down from 1.54 million the previous week. Continuing claims, which indirectly reflect the speed at which people are being rehired, are expected to dip below 20 million for the first time since April, at 19.80 million.

The numbers will be released simultaneously with the Philadelphia Fed’s regional business survey. The New York Fed’s Empire State survey earlier this week showed a stronger-than-expected rebound in manufacturing activity.

2. Banks vindicate ECB's rate cut with biggest-ever liquidity operation

The European Central Bank carried out its biggest ever single injection of liquidity into the eurozone’s money markets, in an apparent vindication of its move to push interest rates still further into negative territory last month.

Banks borrowed 1.308 trillion ($1.47 trillion) from the ECB’s latest Targeted Long-Term Refinancing Operation, or TLTRO, the first to offer a rate as low as -1% for banks that meet the ECB’s lending criteria (which means nearly all of them). After netting out money that is being shifted from other outstanding ECB loans this week, it still adds up to a liquidity injection of 548 billion euros.

The high demand implies that the lower rate isn’t as destructive as some had feared with regard to bank profitability. Pictet Wealth Management economist Frederik Ducrozet said it will result in a net transfer of 15 billion euros to the participating banks. The euro was little changed at $1.1248, while sovereign bond spreads tightened modestly.

3. Stocks set to open mixed

U.S. stocks are set to open mixed, as concerns about the coronavirus and an increase in political noise undermine confidence in a V-shaped economic recovery.

By 6:30 AM ET (1030 GMT), the Dow Jones 30 futures contract was down 31 points, or 0.1%, while the S&P 500 futures contract was down 0.1% and the Nasdaq 100 futures contract was up less than 0.1%.

Stocks in focus on Thursday will include T-Mobile, which predicted a healthy rise in customers this year after the closing bell on Wednesday. That should offset concerns about higher-than-expected one-off costs from its merger with Sprint, and a bigger-than-expected hit from Covid-19 related provisions.

Big tech will also be in focus after the U.S. effectively pulled out of international talks on a new framework for taxing multinational companies. That makes the imposition of digital services taxes in key markets in Europe likelier – as well as a U.S. response in the form of fresh import tariffs.

4. Bank of England expected to increase QE

The Bank of England is expected to ramp up its monetary support for the U.K. economy at its Monetary Policy Committee meeting.

Analysts expect the BoE to increase its asset purchase program by at least another 100 billion pounds, given that the current pace of bond-buying will exhaust it by September.

The Organization for Economic Cooperation and Development warned last week that the U.K. economy will shrink by the most of any in the G7 this year due to the Covid-19 pandemic. The country was slow to impose lockdown and social distancing requirements and its economy has a disproportionately high exposure to services, which have suffered more than manufacturing in the downturn.

The pound drifted down 0.6% to a two-week low against the dollar at $1.2485, and also slid to its lowest against the euro since late March.

Elsewhere, the Swiss and Norwegian central banks kept their key rates unchanged, while Indonesia's cut again.

5. Trump brands Bolton a liar after claims of weakness in front of Xi

Former National Security Advisor John Bolton denounced President Donald Trump in widely-trailed excerpt from his soon-to-be-published memoir.

Bolton said Trump had sought the help of President Xi Jinping in getting re-elected in 2020 by engineering a trade deal that he could present as a triumph, and had repeatedly made concessions to Xi despite long-standing U.S. concerns about Chinese intellectual property theft, currency manipulation and human rights observations (Bolton noted on the latter that Trump privately endorsed the establishment of concentration camps for China’s Muslim minority in its western Xinjiang province).

Trump, whose first two years in office were overshadowed by evidence of his soliciting Russian help in the 2016 election campaign, responded by calling Bolton a liar.

Bolton also criticised the Democratic Party for not broadening its efforts to have Trump impeached for abuse of office. Bolton declined to testify at the impeachment hearings last year, preferring to save his revelations for his publishers.

Top 5 Things to Know in the Market on Thursday, June 18th

2020-06-18 20:17:50

Top 5 Things to Know in the Market on Wednesday, June 17th

2020-06-17 21:53:22

1. Beijing tightens restrictions after new Covid-19 outbreak; Fauci warns it isn't over in the U.S.

The Chinese capital tightened lockdown restrictions to tackle what authorities called an “extremely severe” outbreak of the Covid-19 virus, illustrating the pitfalls of the world’s return to normality after a destructive first wave of the pandemic.

Beijing closed its schools, universities and entertainment venues and cancelled over 1,000 flights, and authorities also instated a three-week quarantine rule in the neighboring province of Heilonjiang. However, they haven’t as yet ordered the closure of factories and shops.

The news comes as the U.S. wrestles with a rise in new infections in states from Florida and Texas to California. Anthony Fauci, head of the National Institute for Allergies and Infectious Diseases, told the Financial Times that “All you need to do is look at the data, the facts, to see that the pandemic is not over by any means. The numbers speak for themselves.”

Vice-President Mike Pence had downplayed talk of a second wave of infections in the U.S. as “overblown” panic in an op-ed for The Wall Street Journal published on Tuesday.

2. Chinese and Indian soldiers die in border skirmish; Korean tensions rise

The world’s two most populous nations are at each other’s throats over a border dispute. At least 20 soldiers died in a clash between Chinese and Indian troops in a disputed region of the Himalayas mountain range, according to information from the countries’ armed forces.

The clash came as Indian forces tried to verify that China had honored a pledge to vacate certain disputed parts of their joint border.

Elsewhere in Asia, North Korea threatened to redeploy troops to its demilitarized border with South Korea and resume “all kinds of regular military exercises” in a further escalation of tension after blowing up a building that was supposed to host peace talks between the two countries on Tuesday.

South Korea responded with warnings of its own. Relations between the two have worsened considerably since the collapse of President Donald Trump’s peace overtures to North Korea in 2018.

3. Stocks set to open higher, but travel sector weighs

U.S. stocks are set to open with modest gains ahead of the second day of Federal Reserve Chairman Jerome Powell’s Congressional testimony.

Powell had again warned of a slow and bumpy recovery on Tuesday, although he acknowledged that the worst may be over for the U.S. economy, on a day when fresh data showed retail sales and industrial production rebounded in May.

By 6:30 AM (1030 GMT), the Dow Jones 30 Futures contract was up 59 points, or 0.2%, while the S&P 500 Futures contract was up 0.3% and the Nasdaq 100 futures contract was up 0.4%.

Stocks in focus on Wednesday are likely to include Norwegian Cruise Line (NYSE:NCLH), which extended the suspension of sailings by some of its biggest brands through September in an announcement after the bell on Tuesday. Southwest Airlines (NYSE:LUV) may also come under pressure after saying it would keep middle seats open on its flights due to Covid-19 concerns, reducing its effective capacity.

4. Tesla's Cali sales plunge; European auto sales recover weakly

Tesla (NASDAQ:TSLA) stock will also be in the spotlight after a report suggesting that its sales in California fell 37% in April and May. The report, citing data from Dominion Enterprises, underlines the problems in keeping the company’s sales momentum in a key state market going.

The news comes at a time when car sales worldwide are flagging. Data released in Europe on Wednesday showed new car registrations down over 53% on the year in May, although this was an improvement from a decline of over 70% year-on-year through April. The biggest increase came in Italy, where sales had all but ground to a halt in the first full month of its pandemic lockdown.

5. EIA, OPEC to update on oil markets

The U.S. government will release its weekly report on domestic oil supplies at 10:30 AM ET, with analysts’ estimates of a 152,000 barrel decline in crude inventories looking vulnerable to a negative surprise after the American Petroleum Institute reported a surprise increase in stocks late on Tuesday.

Before that, the Organization of Petroleum Exporting Countries will release its monthly report on the state of the oil market and is expected to corroborate the International Energy Agency’s upward revisions to crude demand for this year and next.

The Russian news agency TASS reported meanwhile that parties to the ‘OPEC+’ deal on output restraint were still failing to comply fully with the deal in May, something that could make Russian support for a further extension more problematic.

U.S. crude futures were down 0.8% at $38.06 a barrel, while Brent futures were down 0.4% at $40.77 a barrel.

Top 5 Things to Know in the Market on Tuesday, June 16th

2020-06-16 20:35:38

1. Powell to testify before Congress

Federal Reserve Chairman Jerome Powell will testify before the Senate Banking Committee in his semi-annual report to Congress on the state of monetary policy, starting at 10 AM ET (1400 GMT).

Powell is set to unveil the Fed’s first new forecasts for the U.S. economy this year, having passed in March due to the uncertainty caused by the pandemic.

He’ll also likely talk up the effectiveness of the Fed’s stimulus, which will gain another leg from today in the shape of direct purchases of individual corporate bonds. The Fed will buy according to an internally-developed index made up of all the bonds in the $9.6 trillion corporate debt market from companies that qualify. The issuer must have had an investment-grade-rating as of March 22 and the securities must have a remaining maturity of less than five years.

The start of New York Fed’s announcement that such purchases will start this week had been enough to ensure that U.S. stocks closed in positive territory on Monday, even though they had clearly been prefigured in the Fed’s announcement of the program in March.

2. Retail sales, industrial production data due

Powell will be testifying against the backdrop of a fresh data dump from the U.S. economy in May. Retail sales, due at 8:30 AM, are expected to have rebounded by 8% in May after their record 16.4% drop in April, with core retail sales rising by a more modest 5.5%. Core sales have fallen for three months in a row – the first time they have done so in eight years.

The retail sales data will be followed by industrial production and manufacturing output figures at 9:15 AM. Industry has rebounded faster than consumption in China, where the virus hit first, but economists expect only a 2.9% increase in output in May.

The National Association of Home Builders will also release its housing market index for the month at 10 AM. That’s expected to rise to 45 from 37 last month.

3. Stocks set to open higher on central bank support

U.S. stock markets are set to open higher, still supported by the Fed’s promise of action to support the credit markets on Monday. There is also chatter of the Trump administration preparing an additional $1 trillion infrastructure spending bill, but given that such stories have popped up repeatedly since before Trump’s election, it’s not clear how much more real the plan is now.

By 6:30 AM ET, the Dow Jones 30 Futures Contract was up 509 points, or 2.0%, while the S&P 500 Futures contract and the Nasdaq 100 Futures contract were both up 1.4%.

Stocks to watch on Tuesday include Groupon (NASDAQ:GRPN), which reports quarterly earnings, and Tesla (NASDAQ:TSLA), which the Financial Times reported as having agreed a major supply deal for cobalt with mining giant Glencore (OTC:GLNCY).

.4. Bank of Japan ups stimulus ahead of other CB meetings

The Bank of Japan increased the size of its direct lending program for corporates to the equivalent of $1 trillion, from an originally announced $700 billion.

The news had little effect on the yen, with traders having priced in such action already. However, it supported risk appetite in overseas markets, bolstering hopes of further central bank action in the course of the week.

In addition to the Fed’s new bond-buying and the BoJ’s action, the Bank of England and the Swiss National Bank are both expected to announce fresh stimulus at their regular policy meetings on Thursday. Elsewhere, the European Central Bank's Fabio Panetta hinted that the ECB may follow the Fed in buying the debt of so-called 'Fallen Angels', having so far excluded junk-rated companies from its own corporate debt purchases.

5. IEA sees sharper rebound in oil demand

The International Energy Agency trimmed its forecasts for oil demand destruction this year in its latest monthly report on the global oil market.

The IEA revised up its forecast for average demand by 500,000 barrels a day. It now sees demand falling on average by 8.1 million b/d, rather than the 8.6 million b/d it forecast last month. That’s still the biggest-ever yearly drop since the IEA began compiling its data.

The IEA was also more optimistic about 2021, projecting a 5.7 million b/d increase in demand. That suggests the market will rebalance more quickly than many think, given that supply is likely to be constrained by financial distress in the U.S. shale industry.

U.S. crude futures were up 1.6% at 6:30 AM at $37.72 a barrel, while Brent futures were up 1.7% at $40.40 a barrel.

Top 5 Things to Know in the Market on Friday, June 12th

2020-06-12 17:35:37

1. Stocks set to rebound strongly after reality check

U.S. stock markets are set to surge Friday, rebounding after Thursday’s sharp selloff which has acted as a reality check given the strong gains on Wall Street over the last couple of months.

By 6:30 AM (1030 GMT), the Dow Jones 30 Futures contract was up 587 points or 2.3%, while the S&P 500 Futures contract was up 1.9% and the Nasdaq 100 futures contract was 1.6% higher.

Wall Street tumbled in a broad sell-off on Thursday, with the Dow suffering its biggest one-day decline since the middle of March, as a jump in new Covid-19 infections threatened to slow down the pace of the reopenings prompting investors to ditch stocks and flee to safety.

The Dow Jones Industrial Average fell 6.9%, or 1,861 points. The S&P 500 fell 5.9%, while the Nasdaq Composite slumped 5.3%.

The indices are on track to end a spell of three winning weeks, with the DJIA down 7% so far, the S&P 500 down 6% and the Nasdaq Composite 3% lower.

“Equities had been trading in large part due to three factors: a V-shaped recovery of the real economy and earnings, optimism on the medical and public health front, and the likelihood of additional support from both the Fed and the fiscal authorities,” said John Velis, FX and Macro Strategist, Americas, BNY Mellon (NYSE:BK) in a note to clients.

2. U.K. suffers record output drop

Britain's economy suffered a record collapse in April, shrinking by 20.4% in April from March as the country spent the month in a tight coronavirus lockdown.

"Record GDP falls in today’s figures. When taking April and March together the economy is 25% smaller. The economy in April the same size as it was in 2002," ONS statistician Rob Kent-Smith said on Twitter.

"Virtually all areas of the economy were hit, with pubs, education, health and car sales all giving the biggest contributions to this historic fall," said Jonathan Athow, deputy national statistician for economic statistics.

These figures are particularly weak when compared with the U.K.’s main European rivals.

The Bank of France estimated Thursday that the French economy would show a 15% quarterly contraction in the April-June period, while German industrial output dropped by 17.9% in April from March.

The Organisation for Economic Co-operation and Development did warn on Wednesday that Britain was on course for the worst downturn among all the major economic powers, forecasting its economy would contract 11.5% this year.

3. Heavy economic data slate

There are a number of economic indicators due for release Friday, with the Michigan Consumer Sentiment survey, due at 10:00 AM ET (1400 GMT), the main release.

Expectations are for a number of 75 for June, up from 72.5 the prior month, with sentiment likely on the rise as businesses are reopening and individual restrictions are being loosened in much of the country.

That said, the number of cases of the virus continues to rise in a number of the more populous states, while Federal Reserve Chairman Jerome Powell was downbeat in his assessment of the economic outlook earlier this week.

Before this, May's import price index, which measures the change in the price of imported goods and services purchased in the U.S., is expected to come in at 0.6% compared with a contraction of 2.6% for the prior month.

May's export price index is also due and is expected to be a gain of 0.6% compared to a contraction of 3.3% the prior month. The figure tracks changes in U.S. exports to determine whether there was an increase in goods sold abroad or merely an increase in the price of exported goods.

Both indices are due at 8:30 AM ET (12:30 GMT).

4. Crude prices set for weekly drop

Crude oil prices were mixed Friday after Thursday’s sharp losses amid fears a surge in new coronavirus infections in many U.S. states could hinder a fragile recovery in demand at the world’s largest consumer, while swelling stockpiles raised fresh concerns about excess supply.

However, Treasury Secretary Steven Mnuchin said the U.S. shouldn’t shut down the economy again even if there is another jump in coronavirus cases, helping the tone Friday.

“In our view, the bar for turning to lockdowns again seems very high,” said Danske Bank, in a note to clients. “Not least in the U.S., where there is strong opposition to this.”

Additionally, “the oil market has been overdue a pullback, with prices getting somewhat ahead of actual fundamentals,” said Warren Patterson head of commodities strategy at ING Bank NV in Singapore. “While the market is moving from a surplus to deficit environment, inventories remain at elevated levels and refinery margins are still very weak.”

Oil is heading for the first weekly loss since late April, also weighed by an increase in American crude stockpiles to a record high which raised fresh concerns about a potential supply glut.

Attention will turn Friday to the weekly release of the Baker Hughes rig count, an important business barometer for the oil drilling industry.

By 6:30 AM ET, U.S. crude futures were down 0.2% at $36.26 a barrel, while the global benchmark Brent was 0.2% higher at $38.61 a barrel.

5. Time to ditch Tesla (NASDAQ:TSLA) stock?

Tesla stock has been one of the most desired on Wall Street over the last year or so, climbing around 145% this year, making the California-based electric-vehicle maker the top performer on the Nasdaq.

The stock climbed above $1,000 for the first time ever on Wednesday, resulting in a market capitalization of $120 billion, nearing that of Toyota, the biggest automaker in the world.

However, this may be the time for investors to think carefully about owning the stock, at least that what a couple of investment banking giants think.

Morgan Stanley (NYSE:MS) downgraded Tesla to underweight earlier Friday, saying its elevated price doesn’t properly reflect emerging risks, citing price cuts in China and the U.S..

Goldman Sachs (NYSE:GS) also cut its investment stance on the car maker Friday to neutral on a 12-month basis, citing a lofty valuation. However, it remained positive on the stock over the longer term.

Top 5 Things to Know in the Market on Thursday, June 11th

2020-06-11 20:06:34

1. Fed offers up gloomy outlook; Deflation now a worry?

The Federal Open Market Committee kept rates unchanged Wednesday, with the fed funds range at 0-0.25%, and reiterated its commitment to maintaining easy monetary policy measures for some time.

"The committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals," the Fed said.

This looks like being a long time - just two out of 17 FOMC members expect to see a rate rise before the end of 2022.

The Fed stated that the economy is expected to contract by 6.5% in 2020, and the unemployment rate for the year is expected to come in at 9.3%.

However, it’s the pace of inflation which is likely to be the key driver for future monetary policy, and this was forecast to cool to a rate of 0.8%, down from 1.9% previously.

In the press conference, Fed chief Jerome Powell “mentioned a weak inflation pressure, however, he did not sound overly concerned,” said analysts at Nordea, in a research note. “We, on the other hand, see deflation risks as high and have been flagging it for a while.”

This followed the core Consumer Price Index turning negative Wednesday. It also declined for the third consecutive month, which has never happened before.

The Producer Price Index for May is due at 8:30 AM ET (12:30 GMT), and will no doubt be watched closely. It measures the change in the price of goods sold by manufacturers and is a leading indicator of consumer price inflation.

Analysts estimate the PPI will rise 0.1% for the month of May, a reversal of the 1.3% decline the previous month.

2. Fears of a second coronavirus wave across the U.S.

Fears are starting to grow that the prompt reopening of many states across the U.S. will result in a second wave of infections from the Covid-19 virus, likely causing even more economic damage to a country already in an exceedingly deep recession with millions unemployed.

A few days ago top World Health Organisation official Dr. Hans Kluge warned that the pandemic was not over, and now was the "time for preparation, not celebration."

With this mind, Bloomberg reported that Texas had registered 2,504 new coronavirus cases on Wednesday, the highest one-day total since the pandemic emerged. Florida also noted 8,553 new cases this week, the most of any seven-day period, while California’s hospitalizations are at their highest since May 13 and have risen in nine of the past 10 days.

“There is a new wave coming in parts of the country,” said Eric Toner, a senior scholar at the Johns Hopkins Center for Health Security. “It’s small and it’s distant so far, but it’s coming.”

The Organization for Economic Cooperation and Development warned only Wednesday that global growth will contract by 7.6% in 2020 if there is a second wave of Covid-19 infections, a bigger hit than the drop of 6% it predicted without a new wave.

3. Weekly jobless claims due

The go-to data to measure the state of the U.S. employment market will be released at 8:30 AM ET (12:30 GMT), and initial jobless claims are estimated to be 1.55 million for the week, down from 1.87 million the prior week, as the overall trend on jobs continues to improve with the reopening of businesses.

Unemployment is still above 13%, according to the government's most recent report, the highest since the post-World War II era. Continuing jobless claims are estimated to come in near 20 million, down from 21.5 million the previous week.

The reopening of the U.S. economy is clearly having a positive effect, but there is a very long way to go. Without an acceleration of hiring it would take another seven months to fully replace the April payroll at the May hiring rate.

4. Stocks set to open lower; Tech in focus

U.S. stock markets are set to open sharply lower following the downbeat comments from the Federal Reserve Wednesday, with not even the dominant tech sector able to prevent a sharp sea of red.

By 6:30 AM (1030 GMT), the Dow Jones 30 futures contract was down 496 points or 1.8%, while the S&P 500 futures contract was down 1.5% and the Nasdaq 100 futures contract was 1.1% lower.

The Dow Jones Industrial Average and S&P 500 had ended a choppy session lower on Wednesday, but the Nasdaq Composite closed above the 10,000 level for the first time, underscoring the rebound in technology-related stocks following the coronavirus rout.

At the forefront of this strength has been Apple (NASDAQ:AAPL), with the tech giant this week becoming the first US company to achieve a $1.5 trillion market capitalization.

The tech sector will remain in focus Thursday, as graphics software maker Adobe (NASDAQ:ADBE) reports earnings. Wall Street is awaiting Adobe's comments on how the Covid-19 pandemic and related business shutdowns affected its cloud computing business, something management warned about in their prior quarter earnings.

5. Crude inventories point to supply glut

Crude oil prices continued to push lower Thursday, as an increase in American crude stockpiles late Wednesday to a record high raised fresh concerns about a potential supply glut, just as the Federal Reserve was cautioning about longer-lasting damage on the economy from the coronavirus.

U.S. commercial crude oil inventories grew by 5.72 million barrels last week, according to the Energy Information Administration. This was very different from the small stock drawdown the market was expecting, but backed up the previous day's report from the American Petroleum Institute.

“This increase now sees total U.S. commercial crude oil inventories stand at 538 million barrels, surpassing the levels seen back in early 2017, and in fact the highest level going as far back as 1982,” analysts at ING wrote, in a research note.

Global production cuts and the easing of lockdowns in some countries had pushed prices higher after the historic drop below zero in April. But, there are concerns U.S. producers may pump more with crude above $30 a barrel, adding to a glut.

By 6:30 AM ET, U.S. crude futures were down 2.8% at $38.48 a barrel, while the global benchmark Brent was 2.7% lower at $40.62 a barrel.

Top 5 Things to Know in the Market on Wednesday, June 10th

2020-06-10 18:16:40

1. It’s all about the Fed

The Federal Open Market Committee's two-day meeting ends later Wednesday, and the statement emerging from this get together will form the focus of today’s activity.

The Fed, along with the Treasury and Congress, have pumped trillions in stimulus to support businesses that were forced to shut down because of Covid-19.

“There will be no rate changes,” analysts at Nordea wrote, in their preview piece last week. “The Fed has clearly dismissed the idea of going to negative while also stating that the target range will remain unchanged ‘until the economy has weathered recent events and is on track to achieve maximum employment and price stability’. These goals are Fed miles off from achieving at the moment.”

Thus the focus will be partly on forward guidance tools such as yield curve control, partly on updated economic projections, particularly after Friday’s shock employment report.

2. Coronavirus to provoke worst recession for 100 years - OECD

The Organization for Economic Cooperation and Development revised Wednesday its forecasts for the damage the coronavirus pandemic is likely to do to the global economy, and the news wasn’t good.

“Economic impacts are dire everywhere,” the OECD summarized in its Economic Outlook, saying that the global economy is on track to suffer the worst recession outside of wartime in 100 years.

“The recovery will be slow and the crisis will have long-lasting effects, disproportionately affecting the most vulnerable people.”

The OECD said global growth will contract by 7.6% in 2020, assuming there is a second wave of Covid-19 infections. If a second wave is avoided there would still be a drop of 6% this year.

These figures suggest more than twice the devastation to the global economy than its previous forecast released in early March, before the full extent of the crisis became apparent.

They are also worse than the 5.2% contraction in 2020 the World Bank offered up on Monday, in its latest Global Economic Prospects report.

3. CPI data on the slate

The U.S. consumer price index data for May is scheduled to be released at 8:30 AM ET (12:30 GMT), and is forecast to grow 0.2% in May compared with the same month last year, but to decline 0.1% since April.

Total consumer prices fell 0.8% in April, the sharpest drop since the end of 2008 after energy prices plummeted.

Core CPI, which excludes energy and food prices, is expected to increase 1.3% since last May, but drop 0.1% since April.

Earlier Wednesday, data showed that China's producer prices fell by the sharpest rate in more than four years, dropping 3.7% from a year earlier, the sharpest decline since March 2016.

4. Stocks set to open mixed; Nasdaq at all-time high

U.S. stock markets are set to open mixed, with the tech stocks-dominated Nasdaq Composite index leading the way.

By 6:30 AM (1030 GMT), theDow Jones 30 futures contract was down 113 points or 0.4%, while the S&P 500 futures contract was down 0.3% and the Nasdaq 100 futures contract was 0.1% higher.

The Nasdaq ended at an all-time high for a second straight day Tuesday after briefly rising above the 10,000 mark for the first time. Its gains came on the back of strong gains in tech-related shares, a day after the index became the first of Wall Street's major indexes to confirm a new bull market.

5. Crude inventories data due

Crude oil prices traded lower Wednesday, weighed by the American Petroleum Institute reporting late Tuesday that U.S. crude supplies rose by 8.4 million barrels for the week ended June 5.

This was very different from the small drawdown in stocks that the market was expecting, and raises fears of a supply glut.

Attention now turns to the official weekly crude oil inventories data, at 10:30 AM ET (14:30 GMT). The expectation is for a decline of 1.74 million barrels for the week ending June 5 compared with a decline of just over 2 million barrels the previous week.

Gasoline inventories are also expected to fall 71,000 barrels compared to a gain of 2.8 million barrels.

By 6:30 AM ET, Crude Oil WTI Futures were down 2.7% at $37.89 a barrel, while the global benchmark Brent was 2.2% lower at $40.27 a barrel.

The Australian think tank the Institute for Economics and Peace warned Wednesday that the impact of coronavirus may “result in the collapse of the shale oil industry in the U.S., unless oil prices return to their prior levels.”