Stocks Briefly Erase Pandemic Losses; Oil Rallies

US stocks briefly surpassed the all-time closing high reached before the coronavirus pandemic, propelled by surging technology shares. The dollar weakened and Treasury yields rose to five-week highs. The S&P 500 rose by 1.4% to 3,380.35 while Dow Jones was up 289.93 points (1.05%) to 27,976.84.

US Inflation Quickened in July on Costs of Vehicles, Apparel

US consumer prices rose in July by more than expected on a jump in auto and apparel costs, though inflation remained broadly muted as the pandemic suppressed demand. The consumer price index rose 0.6% from the prior month, following a 0.6% gain in June, Labor Department figures showed. Compared with a year earlier, the gauge increased 1%, after June’s 0.6% rise.

Mnuchin, Kudlow Say Congressional Vote Needed for Capital Gains Cut

The White House isn’t considering an executive order to carry out President Donald Trump’s call for a cut in the capital gains tax because Congress probably would have to change the rate, administration officials said. Structural changes to tax rates, said Larry Kudlow, Trump’s top economic adviser, likely require congressional legislation. Trump said he was “very seriously” considering a capital-gains tax cut, without specifying how it would be carried out.

US Budget Deficit Shrinks From Year Ago on Tax Deadline Shift

The US budget deficit narrowed sharply in July as virus relief wound down and receipts more than doubled, reflecting the delay in the federal tax payment deadline from April. The nation’s budget gap shrank to US$63bn during the month from US$119.7bn in July 2019, Treasury Department figures showed.

UK’s Worst Slump in Europe Raises Pressure to Sustain Rebound

The UK economy suffered more than any major European nation during the coronavirus lockdowns, piling pressure on the government to ensure the withdrawal of its support programs doesn’t derail the nascent recovery. Gross domestic product plunged 20.4% in the second quarter, the most since records began in 1955 and roughly double that of Germany and the US. It also pushed Britain into its first recession since 2009.

Singapore Regulator Warns of More Bank Job Losses in Second Half

Singapore’s financial-services sector, which accounts for 4.5% of total employment, may see more job losses during the second half of the year as the country goes through its worst recession ever, the central bank warned. Banks, insurers and other financial institutions held up well during the first six months when the sector created about 1,500 jobs and retrenchment levels stayed “subdued,” the Monetary Authority of Singapore said.

RBNZ Expands Bond Purchases to Aid Recovery as Covid Returns

New Zealand’s central bank expanded its quantitative easing program and said it’s open to cutting interest rates into negative territory as a new coronavirus outbreak threatens the economic recovery. The Reserve Bank increased its Large Scale Asset Purchase program to as much as NZ$100bn (US$65bn) from NZ$60bn, and extended it until June 2022, according to a statement.

Oil Rises With Shrinking US Stockpiles Signaling Demand Pickup

Oil closed above a key technical level buoyed by US energy data that suggest a muchawaited recovery in demand is underway as the summer driving season nears an end. Brent crude for October settlement rose US$0.93 to US$45.53 per barrel.

Source: Affin Hwang Research - 13 Aug 2020