Stocks decline in busy earnings week; bonds climb

US stocks fell as traders assessed corporate earnings amid a resurgence in global coronavirus cases. Bonds rose. The S&P 500 fell 0.7% to 3,218.44 while Dow Jones was down 205.49 points (0.8%) to 26,379.28.

US consumer confidence retreats on diminished expectations

US consumer confidence declined in July by more than forecast as Americans became rattled by the recent increase in Covid-19 cases and its impact on the economy and the job market. The Conference Board’s index decreased to 92.6 from a revised 98.3, according to a report issued. The group’s gauge of expectations fell by the most since March, while household sentiment about current conditions climbed.

US homeownership rate soars to highest level since 2008

The US homeownership rate, led by young buyers, jumped to the highest since 2008, signaling that the housing boom underway before the pandemic has only accelerated. The rate was 67.9% in the second quarter, according to a Census Bureau report. It was the fourth straight increase, climbing from 65.3% in the previous three months. The homeownership rate for buyers under age 35 rose to 40.6%, the highest in almost 12 years.

Rishi Sunak warned ‘premature’ end to furlough risks 10% jobless rate

Chancellor of the Exchequer Rishi Sunak’s “premature” withdrawal of government support means UK unemployment will rise above 3mn before the end of 2020, according to an influential think tank. The warning from the National Institute of Economic and Social Research comes as the government prepares to wind down its furloughing plan, which has helped support the wages of 9.5mn jobs, next week.

Spanish unemployment rises above 15%, with worse to come

Spain’s unemployment rate rose in the second quarter, a harbinger of the bleak months ahead for one of Europe’s most troubled labor markets. The increase in jobless reflects the fallout from the strictest part of the country’s lockdown to deal with the coronavirus. The second-quarter data showed that the number of jobless in the euro-area’s fourthlargest economy increased by 55,000 to 3.37 million workers. That lifted the unemployment rate to 15.33% from 14.4%.

ECB urges banks to pause shareholder payouts for longer

The European Central Bank (ECB) extended a de facto ban on banks returning capital to shareholders and urged them to show restraint on bonuses after the coronavirus outbreak, dealing a blow to lenders who lobbied for business as usual. The supervisor asked that banks not pay dividends or buy back shares at least until January, three months longer than initially indicated, and “to be extremely moderate with regard to variable remuneration,” according to a statement.

South Korea’s consumer sentiment improves for third month

South Korea’s consumer confidence improved for a third straight month in July, offering another sign that the country has passed the worst of the pandemic hit. The consumer sentiment index rose to 84.2 this month from 81.8 in June, the Bank of Korea said in a statement. Despite the improvement, the gauge has yet to reach pre-virus levels that exceeded the 100 threshold which separates optimism from pessimism.

Oil slides with expected US supply gain amplifying demand woes

Oil declined as investors shifted their focus to domestic supply, with expectations for another build in already swelling US stockpiles. Brent crude for September settlement declined US$0.19 to US$43.22 per barrel.

Source: Affin Hwang Research - 29 Jul 2020