Stocks rise amid rally in big tech, stimulus talks

US stocks extended their July rally amid a surge in technology shares and on news the White House and Democrats are planning to meet Saturday to discuss the next virus-relief package. The S&P 500 rose by 0.8% to 3,271.12 while Dow Jones was up 114.67 points (0.4%) to 26,428.32.

US incomes fell in June as one-time stimulus boost faded

US incomes fell more than expected in June as the effects of the government’s onetime stimulus checks dissipated, though an increase in unemployment-insurance payments pointed to the importance of expiring federal relief. Personal incomes declined 1.1% mom, a Commerce Department report showed. Consumer spending increased 5.6% in June, after jumping by the most on record a month earlier.

Fed’s Kashkari urges Congress to act, suggests fresh lockdown

The surging US savings rate means the country can afford to support Americans laid off due to the coronavirus pandemic, while a “hard” lockdown could deliver a faster economic recovery, a senior Federal Reserve official said. Federal Reserve Bank of Minneapolis President Neel Kashkari told that Americans are saving more because they aren’t going out as much during the pandemic, and as a result there would be less need to borrow from abroad to finance additional fiscal aid.

Virus plunges euro-area into deep recession

The coronavirus pandemic sent the euro-area economy into the deepest recession on record in the second quarter, taking output back to levels not seen since early 2005. While indicators show a rebound is already underway, the 12.1% plunge in the 19- member region and mounting concerns about new flare-up in infections point to a long recovery that may leave lasting scars in its wake. Spain took the biggest hit, shrinking 18.5%, while French and Italian output also dropped by double digits.

ECB’s De Cos urges ambitious reforms in Spain to spur recovery

European Central Bank (ECB) policy maker Pablo Hernandez de Cos called on officials in Spain to seize on the unprecedented euro-area monetary and fiscal response to the coronavirus to implement an ambitious and comprehensive set of economic reforms. Spain must put in place policies that are commensurate with the magnitude of the challenges the economy faces, he told.

China’s economy sped up in July as factory output recovered

The first official gauge of China’s economy in the second half of the year showed continued upward momentum in the recovery. The official manufacturing purchasing managers’ index in July rose to 51.1 from 50.9 a month earlier, according to data released by the National Bureau of Statistics. The non-manufacturing gauge dropped slightly to 54.2, while the construction indicator rose back above 60.

Japan’s Suga sees difficult balance between virus fight, economy

Japan is trying to both contain a resurgence of the coronavirus outbreak and support the economy, especially the tourism sector, according to Chief Cabinet Secretary Yoshihide Suga. Striking a balance is “extremely difficult,” Suga said, adding the government is helping businesses avoid bankruptcies through virus relief measures such as special loan programs.

Oil fluctuates near US$40 as market braces for higher OPEC supply

Oil held near US$40 a barrel, with gains capped by uncertain prospects for a demand recovery from coronavirus as OPEC+ producers start to unwind their production cuts. Brent crude for October settlement fell US$0.09 to US$43.43 per barrel.

Source: Affin Hwang Research - 3 Aug 2020