US Stock Futures Edge Higher; Gold Steadies

Asian stocks headed for a mixed start and US equity futures pared late-session losses, as doubts lingered over the timing of a spending package from Washington. Gold steadied after tumbling the most in seven years. The S&P 500 fell by 0.8% to 3,333.69 while Dow Jones was down 104.53 points (0.38%) to 27,686.91.

Core US Producer-price Gauge Accelerates From a Year Ago

A core measure of prices paid to US producers accelerated in July for the first time in six months, in a sign the economy is stabilizing. The producer-price index excluding food and energy rose 0.3% from July 2019 after a 0.1% increase in the year through June, Labor Department figures showed. Compared with the prior month, the core PPI rose 0.5% in July, the largest gain since 2018.

Fed’s Barkin Warns Economy Faces ‘sinkhole’ Requiring More Aid

The US economy has lost momentum in recent weeks because of a resurgence of the coronavirus and that may call for more sustained fiscal support to cushion the blow, a senior US central banker said. “We thought the economy faced a pothole and stimulus put a plate over it so we could navigate,” Federal Reserve Bank of Richmond President Thomas Barkin told. The escalation of the virus may make the pothole into a sinkhole and that would create the need for a longer plate.

UK Jobs Crisis Worsens as Employment Drops Most Since 2009

Britain’s mounting labor market crisis was underscored by a 220,000 slump in employment during the height of the coronavirus lockdown, the worst decline since the global financial crisis. The fall in the second quarter coincided with a period that saw the most strict restrictions to contain the spread of the disease. The Office for National Statistics said early indicators for July suggest that the number of employees on payrolls is down around 730,000 compared with March.

Investor Confidence in German Rebound Unexpectedly Strengthens

Investors unexpectedly raised their expectations for Germany’s recovery, adding to signs that Europe’s largest economy may bounce back more quickly from coronavirus restrictions than its neighbors. A gauge measuring prospects for the next six months rose to 71.5 in August. Economists had expected a small drop. A measure of current conditions edged lower.

China’s Credit Growth Slows in July as Stimulus Pared Back

China’s credit growth slowed much more than estimated in July after a strong rebound in recent months, reflecting a drop in short-term financing and a more measured pace of monetary easing as the economic recovery continues. Aggregate financing was 1.69trn yuan (US$243bn), the People’s Bank of China said. That compares to 3.4trn yuan in June.

Singapore Sees Slow Recovery as Economy Plunges by Record

Singapore’s economy suffered a bigger contraction in the second quarter than previously estimated, signaling a long recovery ahead for the trade-reliant nation. Gross domestic product plunged a record 42.9% on an annualized basis in the second quarter from the previous three months, according to final estimates from the Ministry of Trade and Industry.

Oil Dips Lower After Facing Resistance at Key Technical Level

Crude closed lower after failing to hold above a key technical level as a still-raging pandemic threatens to depress demand into the fall. Brent crude for October settlement fell US$0.49 to US$44.50 per barrel.

Source: Affin Hwang Research - 12 Aug 2020