OVERVIEW
Gold prices edged higher, supported by worries over surging coronavirus cases, while an uptick in risk appetite among investors limited upside for the safe-haven metal. Copper and most other base metals rose alongside equities markets, riding on hopes of a pickup in pace of China’s economic recovery and more stimulus steps to support the global economy. The dollar held steady against most currencies as investors awaited data expected to show the U.S. services sector stopped contracting, which would further lift hope a for an economic recovery from the coronavirus pandemic.
WORLD
Wall Street futures rose as investors looked past the domestic surge in new infections and counted on signs of an economic rebound in China to boost global growth. European shares rallied and Japan’s Nikkei ended higher boosted by shippers and steelmakers. The yuan led commodity currencies higher against the dollar, while spot gold edged up. Brent crude rose, supported by tighter supplies. IHS Markit’s Purchasing Managers Index data is scheduled for release later in the day.
JPMorgan Chase & Co. see global debt levels surging $16 trillion this year, bringing combined public and private sector borrowing past $200 trillion for the first time. The strategists said that this is bullish as “most of this liquidity will eventually be deployed into equities.”
BlackRock Inc., the world’s biggest asset manager, saying it expects stocks and bonds in China — and those of its main trading partners — will do better than global emerging markets in the next six to 12 months.
The bullish enthusiasm from Beijing is helping drive global equities higher this morning. Overnight, the MSCI Asia Pacific Index gained 1.7% while Japan’s Topix index closed 1.6% higher. In Europe, the Stoxx 600 Index had added 1.4% by 5:50 a.m. Eastern Time with every industry sector posting gains. S&P 500 futures pointed to a strong open in the U.S. after the holiday weekend, the 10-year Treasury yield was at 0.689% and oil was higher.
Economists now rule out a full economic recovery for this year, and even a 2021 comeback depends on a lot going right. Even with trillions of dollars in unprecedented government and central bank support, hopes for a V-shaped rebound have been shattered. “There is a real danger of confusing rebound with recovery,” World Bank’s chief economist Carmen Reinhart said.
Goldman Sachs doesn’t think Chinese stocks will get hurt in a significant way unless the U.S.-China relationship gets a lot worse. The bank reiterated its overweight rating on the nation’s equities. And Hong Kong stocks may yet join the rest of the world in bull market territory after a more than $1.1 trillion rebound gathered steam in recent days.
METALS
It is a big week for commodity traders, with copper remaining in focus after Chile’s state-owned Codelco suspended construction work at its largest mine, helping to keep the metal above $6,000. Chile releases export data for June tomorrow.
OIL
Saudi Arabia raises August crude official selling prices Saudi Arabian state oil producer Aramco has raised official selling prices (OSPs) to all destinations for its Arab light crude, the company said in a statement. Saudi Arabia raised the August price to Asia to plus $1.20 a barrel versus Oman/Dubai average, up $1 from July.
Buffett’s Berkshire to buy Dominion Energy gas assets for $4 billion Berkshire Hathaway said its energy unit will buy Dominion Energy’s natural gas transmission and storage network for $4 billion, helping billionaire Chairman Warren Buffett reduce his conglomerate’s cash pile while letting Dominion focus on utilities operations.
AGRICULTURE
U.S. soybeans rose more than 1%, as concerns about hot and dry weather in a key growing region in the United States pushed prices to a more than a four-month high. Corn rose 1.5%, recouping all the losses from the previous session, while wheat firmed nearly 1%. London cocoa prices on ICE hit 1-1/2 year lows on Friday as further signs emerged that the coronavirus pandemic has battered demand for the chocolate ingredient. U.S. markets were closed for the Independence Day holiday. Malaysian palm oil futures j umped more than 1%, underpinned by forecasts of lower June stockpiles, and as rival soybean oil prices advanced to a four-month high.
Chart of The Day
