US stocks climb on bets stimulus deal is coming

The S&P 500 Index posted a fourth straight advance amid encouraging news on the vaccine front and speculation US lawmakers are making progress on an economic aid package. The S&P 500 rose by 0.64% to 3,327.77 while Dow Jones was up 373.05 points (1.39%) to 27,201.52.

US borrowing breaks fresh records, shifting focus to Fed

The US government will push its fundraising to new extremes this quarter to cope with a budget deficit unseen since the country mobilized to fight World War II. The Treasury expanded its plans for borrowing at longer maturities in the coming months, saying it will sell a record US$112bn of securities at next week’s so-called quarterly refunding of maturing Treasuries.

Orders power US services index to highest since early 2019

US service industries expanded in July at the fastest pace since February 2019 as the strongest reading yet on orders and a pickup in business activity more than offset a bigger contraction in employment. The Institute for Supply Management said that its services index climbed to 58.1 from 57.1 the previous month. The robust gauge mirrors the group’s manufacturing index and underscores a growing number of purchasing managers reporting steady improvement from pandemic lows in March.

Euro-area economy stages stronger rebound with demand picking up

Businesses in the euro zone saw stronger growth than initially reported in July, with output expanding for the first time since coronavirus lockdowns hit the economy in March. Services providers and manufacturers both saw activity pick up. A composite purchasing managers’ index rose to 54.9, the highest level in just over two years and above a flash estimate. Orders increased for the first time in five months.

UK services activity expands at fastest pace in five years

Output from the UK’s dominant services industry rose at the fastest pace since 2015 in July as more of the nation’s economy opened up after the coronavirus lockdown. IHS Markit’s Purchasing Managers’ Index rose to 56.5 last month, up from 47.1 in June. While that is marginally below the 56.6 flash estimate, it is well above the 50 level that indicates expansion for the first time in five months.New orders climbed as firms reopened and business expectations improved for a fourth straight month, Markit said.

Indonesia economy shrinks for first time since Asian crisis

Indonesia’s economy contracted for the first time since the aftermath of the Asian Financial Crisis more than two decades ago, as movement restrictions to contain the coronavirus outbreak took a toll on Southeast Asia’s largest economy. Gross domestic product declined 5.32% in the second quarter from a year ago, data from the statistics bureau showed, its deepest contraction since the first three months of 1999.

Thai central bank holds rates steady, sees gradual recovery

The Bank of Thailand held its benchmark interest rate at an all-time low and said it was prepared to use “additional appropriate monetary policy tools” to support an economy suffering the biggest blow in Asia from the coronavirus pandemic. The central bank kept its policy rate at 0.5% in a unanimous decision. Southeast Asia’s second-largest economy is forecast to contract 8.1% this year.

Oil pares rally in wake of mounting US fuel supplies

Oil pared gains as investors assessed a government report that showed a decline in US crude inventories, yet an increase in refined product supplies. Brent crude for October settlement rose US$0.74 to US$45.17 per barrel.

Source: Affin Hwang Research - 6 Aug 2020