Stocks Eke Out Gain Amid Doubt on Stimulus Timing

US stocks eked out a third straight gain, though finished well off session highs after Senator Mitch McConnell cast doubt on reaching a fresh rescue bill before some current benefits expire. The S&P 500 rose 0.17% to 3,257.30 while Dow Jones was up 159.53 points (0.6%) to 26,840.40.

US and UK Discuss Plans for Coalition to Resist China

US Secretary of State Michael Pompeo praised Britain’s tougher stance on China as the transatlantic allies signaled they are planning more coordinated action against Beijing. Pompeo said he wants to build a “coalition” that understands the “threat” posed by China, after talks with UK Foreign Secretary Dominic Raab in London. At a press conference following their meeting, Raab suggested further action at Group of Seven level may follow.

EU Clinches Massive Stimulus Deal to Bind Continent Together

European Union leaders agreed on an unprecedented stimulus package worth 750bn euros (US$860bn) to pull their economies out of the worst recession in memory and tighten the financial bonds holding their 27 nations together. The agreement, required the unanimous approval of the member states and represents a victory for German Chancellor and French President, who drafted an early outline for the proposal in May.

UK Budget Deficit Swells to Record on Coronavirus Stimulus

The UK government borrowed over twice as much last quarter than it did in the whole of the previous fiscal year, amid the towering cost of supporting the economy through the coronavirus crisis. The budget deficit stood at 35.5bn pounds (US$45bn) in June, taking borrowing in the first three months of the fiscal year to a record 127.9bn pounds, the Office for National Statistics said. Debt climbed to 99.6% of GDP, the highest since 1961.

Macron Says France to Get US$46bn From EU Stimulus Deal

Emmanuel Macron said France will receive 40bn euros (US$46bn) after European Union leaders agreed on an unprecedented 750bn-euro recovery fund to help the bloc overcome the economic fallout from the coronavirus pandemic. According to the French president, it won’t cost his country’s taxpayers a cent as the deal stipulates that the EU will be able to levy taxes “on large companies and international players who do not play ball.” Macron said.

Australia Unleashes US$14bn Jobs Support

Australia will pump a further A$20bn (US$14bn) into supporting jobs, as central bank chief Philip Lowe warned of a drawn out recovery while the health crisis remains. The government’s signature wage subsidy program, which is currently supporting about 3.5 million workers, will be extended by six months until the end of March, albeit at a lower rate, Prime Minister Scott Morrison said.

RBA’s Lowe Sees Higher Unemployment, Will Stay on Policy Course

Australia’s central bank chief Philip Lowe said unemployment will rise higher even with the recovery underway, and he’s satisfied with the impact of the policy package, but ready to do more if required. The governor pushed back again on negative interest rates, as well as currency intervention; and against monetary financing Down Under.

Brent Climbs to Four-month High on Signs of Economic Recovery

Oil settled at the highest level since early March in London as indications of an economic recovery from the coronavirus pandemic helped drive a rally in commodities. Brent crude for September settlement added US$1.04 to US$44.32 per barrel

Source: Affin Hwang Research - 22 Jul 2020