Stocks Climb to Record on Tech Rally, Housing Data

US stocks completed the fastest-ever return to a record after a drop of at least 20%, surpassing February highs for the first time since the pandemic upended financial markets. The dollar fell to the lowest in more than two years and Treasuries advanced. The S&P 500 rose by 0.2% to 3,389.78 while Dow Jones was down 66.84 points (0.2%) to 27,778.07.

Trump Pledges Tax Credits, Tariffs to Redirect Jobs From China

President Donald Trump said he’ll punish American companies that move jobs abroad and reward firms with tax breaks for shifting work from China to the US, proposals aimed at hastening the decoupling of the world’s largest economies. “We will create tax credits for companies that bring jobs from China back to America, and we’ll impose tariffs on companies that leave America to produce jobs overseas,” he said in a speech.

US Housing Starts Surge by Most Since 2016 and Permits Climb

US home construction starts increased in July by more than forecast and applications to build surged by the most in three decades, indicating builders are responding to robust housing demand fueled by record-low interest rates. Residential starts jumped by 22.6%, the most since October 2016, to a 1.5 million annualized rate from a month earlier, according to a government report released.

Pelosi Hints Democrats Might Pare Stimulus Plan, Seek More Later

House Speaker Nancy Pelosi suggested that Democrats might be willing to make more cuts to their stimulus proposal to seal a deal with Republicans and speed Covid-19 relief, then come back after the November elections with additional agenda items. “We’re willing to cut our bill in half to meet the needs right now,” she said. Pelosi’s spokesman Drew Hammill later said that she was referring to previous offers to meet Republicans “halfway, not cutting our bill in half.”

Brexit Talks Resume With Just Seven Weeks Left to Reach a Deal

UK and European Union officials have the next seven weeks to find something that has eluded them since March: an agreement over their future relationship. After a brief summer hiatus, face-to-face discussions will resume in Brussels. Britain and the bloc want to reach an agreement before the negotiations are scheduled to conclude Oct. 2.

Draghi Tells Governments Only ‘good’ Debt Can Save Economies

Former European Central Bank President Mario Draghi warned governments to use the massive stimulus they’ve deployed in the coronavirus pandemic to upgrade their economies or face the risk of another debt crisis. In his first high-profile appearance since leaving his post in October, Draghi called for “credible” economic policies to avoid disillusionment among the young, who will have to repay the cost of fighting the coronavirus.

China Calls US Rules on Huawei ‘nothing Short of Bullying’

China denounced the US’s latest moves to curb Huawei Technologies Co.’s access to commercially available chips, the latest blow in an increasingly tense relationship between the world’s two biggest economies. The changes announced by the Commerce Department build on restrictions announced in May, adding 38 Huawei affiliates in 21 countries to an economic blacklist as the US seeks to limit adoption of the company’s 5G technology.

Oil Update

Brent rises ahead of EIA’s crude oil inventory report. Brent crude for October settlement rose US$0.09 to US$45.46 per barrel.

Source: Affin Hwang Research - 19 Aug 2020