US stocks finish mixed; dollar hits week low

US stocks closed mixed after reports showed the economic recovery slowed and stimulus talks reached a stalemate. Treasury debt yields fell for the time this week. The S&P 500 fell by 0.6% to 3,372.85 while Dow Jones was up 34.30 points (0.12%) to 27,931.02.

Fed’s Kaplan says inflation can run ‘moderately’ above 2% goal

The Federal Reserve could allow inflation to accelerate above its 2% goal if has underperformed it in the past, said Dallas Fed President Robert Kaplan. “I would be willing to see inflation run moderately above 2% in the aftermath of periods where we’ve been running persistently below,” Kaplan said. He would be comfortable with inflation around 2.25% or 2.375%.

Germany’s finance minister proposes 10bn-euro plan to safeguard jobs

German Finance Minister Olaf Scholz proposed extending job-preserving subsidies during the coronavirus crisis to 24 months, saying the measure would cost the government an extra 10bn euros (US$12bn) or less. Chancellor Angela Merkel’s government introduced short-time compensation to shield workers and companies in Germany from massive job cuts during the pandemic.

UK housing market sees July flurry as Londoners move out

The UK housing market saw a surge in activity last month as Londoners sought to flee the city after lockdown and a tax break encouraged buyers. More than 37bn pounds (US$50bn) of properties came on sale in July, the highest since March 2008. Prices hit unseasonal record highs in seven regions, but a drop in London pulled down the national average to a 0.2% decline.

RBA’s Lowe sees Victoria outbreak offsetting recovery elsewhere

Australia’s central bank chief said economic growth is unlikely to lift until the final three months of this year, with Victoria’s renewed lockdown to contain its Covid-19 outbreak “broadly offsetting” the recovery that’s been unfolding elsewhere. It is probable that households and businesses will remain more cautious and that this will affect consumption and investment, Governor Philip Lowe said.

South Korea set to rebound from recession, finance minister says

South Korea’s economy is poised to return to growth this quarter, led by consumption and investment, according to the country’s finance minister, who also said the government doesn’t plan another extra budget. Easing export declines will help South Korea bounce back from its first technical recession since 2003, Finance Minister Hong Nam-ki told. South Korea’s economy contracted 3.3% in the second quarter from the previous three months.

Indonesia sees solid post-pandemic recovery in 2021

Indonesia will ramp up government spending to a record high next year and seek the central bank’s help in financing the budget deficit as it seeks to revive an economy reeling from the coronavirus pandemic. Gross domestic product is forecast to grow 4.5%-5.5% next year, while the fiscal deficit is expected to narrow to 5.5% of GDP from this year’s 6.34%, President Joko Widodo said. Spending is projected to rise 0.3% to 2,747.5trn (US$185.2bn), while revenue is seen rising 4.5% to 1,776.4trn rupiah.

Oil rises ahead of OPEC meeting to discuss production curbs

Oil advanced ahead of this week’s meeting of the OPEC+ producer bloc, following recent signals that supply and demand are returning to balance. Brent crude for October settlement rose US$0.25 to US$45.05 per barrel.

Source: Affin Hwang Research - 17 Aug 2020