Markets at Wait-and-See Mode

What's New

. Asian equities edged lower today, following the same path as yesterday and in response to the jump they registered on Monday, amid a rise in coronavirus cases in some parts of the world.

. MSCI Asia-Pacific (ex. Japan) was slightly below its 4.5-month high hit yesterday, as Chinese markets could not get a clear direction as Australian and New Zealand markets registered losses. Japan's Nikkei was 0.1% down, while S&P E-minis were also marginally down.

. Markets are in the "wait and see" mode at the moment, as analysts note, eagerly awaiting for the earnings session, which will begin from next week. This is especially true for the US markets, where the number of cases and deaths in the country could also play an important role in setting the market's direction.

. On the same note, California reported more than 10,000 cases yesterday, a record rise. Most importantly, it also surpassed the number of contacts tracers were looking out for.

. Atlanta Federal Reserve Bank President Raphael Bostic warned on Tuesday that the spike in the number of cases has made business owners “nervous again” and that "there is a real sense this might go on longer than we have planned for.”

. In the Australian state of Victoria a rise in cases led to lockdown measures being re-imposed to Melbourne, with analysts expecting to see economic activity fall sharply in the region, which makes up around 25% of Aussie economy activity, and spread to the rest of the country.

. Brazilian president Jair Bolsonaro is the latest high-profile figure to contract the virus.

. Analysts from Citigroup predict that global markets will hang around the current levels in a year from now, as they expect bullish and bearish forces to cancel each other out. At the same time, Citi suggested to use overweight positions in the US and emerging market equities.

. In the currency markets, most major currencies were trapped in a range. The USD was slightly up against the JPY, with the Aussie and the Kiwi also a bit down. The Euro was barely unchanged at $1.1273.

. The pound was boosted by British Prime Minister Boris Johnson’s re-commitment to reaching a trade deal with the European Union.

. A proposal to decouple the HKD from the USD is making its way to President Trump's desk for review. If this happens, then the HKD will be due for a major devaluation.

. Gold hovered around its 8.5-week peak, with futures standing at $1792 per ounce. Brent oil and WTI were slightly down but both still above $40 per barrel, as US crude stockpiles and forecasts for crude output to fall added to worries about oversupply.

. Earlier today, news from Japan were positive as the current account surplus was better than expected, while bank lending grew by 6.2% y/y in June.

Up and Coming

. Quiet day on the release front, with crude oil inventories standing out of the calendar and forecast to have declined by 3.2 million. The biggest question is now how oil consumption has been affected by the new lockdown measures across the world.

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