Midday Analysis – 2nd July 2020

Today’s Market Outlook

In Asia, the equity markets gained successively after the region took advantage of the mild tailwinds from Wall Street where stocks finished mostly higher on vaccine hopes and equity inflows. Although gains were mild in the absence of any improvement to the increasing COVID-19 infections narrative stateside, new cases surpassed 50k for the first time.  ASX 200 (+1.6%) was lifted by strength in tech with the sector inspired following the recent outperformance of the Nasdaq which posted a record close in the preceding session, while Nikkei 225 (+0.1%) shrugged off the early choppy price action which had been at the whim of an indecisive currency.  

Despite being a day where we would expect at least some progressive increase particularly by retail traders due to the NFP announcement today, markets seem to be trading in a rather indecisive mode. Dow Futures point to a mildly lower open, following European stocks, and is getting insufficient support from solid ADP job data. The JPY appears to be rebounding but it’s kept well above near term resistance level against others. The CHF, on the other hand, is paring some of this week’s gain, but the Euro is even weaker for no apparent reason, other than cross-selling against other Europeans. Overall, major pairs and crosses are bounded inside last week’s range. Breakout is awaited, hopefully, triggered by ISM manufacturing and FOMC minutes. 

Today’s High Impact Events

The times below are GMT+3

15.30 – US Nonfarm Payrolls (NFP)

The US Nonfarm Payrolls have been estimated to rise by 4.0 million, following the 2. million gain in May. This sizeable gain has been signalled by Fed economists.  A 6.5 million rise over two months would reverse less than a third of the 22mn plunge in the previous two months, and the renewed uptrend in COVID cases cautions against the temptations to generalise. 

15.30 – US Average Hourly Earnings

Hourly Earnings in the United States averaged 0.23 percent from 2006 until 2020, reaching an all-time high of 4.70 percent in April of 2020 and a record low of -1 percent in May of 2020. 

15.30 – US Unemployment Rate

In May, 4.9 million people were counted as working when they should have been counted as unemployed. Had these people been properly classified, the unemployment rate would have been reported as 16.4 percent, not 13.3 percent.

Coronavirus Status Update 

US daily coronavirus cases increased by over 50,000 for the first time ever after California, Texas and Arizona all suffered record daily increases according to the FT. While AFP tweeted that the US experienced a record increase of 52,000 cases in 24 hours citing the Johns Hopkins tracker.  

California COVID-19 cases rose by 9,740 or 4.4% (Prev. +2.9%) and the death toll rose by 100, Florida COVID-19 cases rose by 6,563 or 4.3% (Prev.+4.2%), New York COVID-19 cases rose by 625 or 0.2% (Prev. +0.1%) with the positivity rate at 1.1% (Prev. 1.0%), while Texas coronavirus cases increased by a record 8,076 and deaths increased by 57 which was the most in 6 weeks. (Newswires).

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