Stocks Slump Most in Week; Treasury Bonds Gain

US stocks fell and Treasuries gained as investors mulled whether the levels of stimulus being provided is enough amid a gradual economic recovery. The S&P 500 fell by 0.84% to 3,357.01 while Dow Jones was down 130.40 points (0.47%) to 27,901.98.

US Jobless Claims Resume Drop in Sign of Gradual Improvement

Jobless claims in regular state programs decreased by 33,000 to 860,000 in the week ended Sept. 12, which coincides with the reference period for the government’s monthly jobs report, according to Labor Department figures released. Continuing claims, the total number of Americans on state benefit rolls, fell by almost 1mn, to 12.6mn, in the week ended Sept. 5.

BOE Steps Up Negative Rates Work as Economic Threats Mount

The Bank of England (BOE) gave the clearest signal yet that it may consider cutting interest rates below zero for the first time in its history as the economy faces a surge in coronavirus infections and the risk of a no-deal Brexit. With multiple threats to the outlook looming, the BOE will begin “structured engagement” with UK bank regulators on how it might implement negative rates. Governor Andrew Bailey said last month the policy has become part of the central bank’s toolkit.

Singapore’s Export Growth Accelerates as China Demand Picks Up

Singapore’s export growth quickened in August, buoyed by rising demand from China and a pickup in key electronic shipments. Non-oil domestic exports grew 7.7% from a year ago, Enterprise Singapore said in a statement Thursday, far higher than the 3.3% median estimate in a Bloomberg survey of economists. Compared with the previous month, exports surged 10.5%, against a median estimate of 2.2%.

Bank Indonesia Holds Rates as Governor Defends Independence

Indonesia’s central bank left its benchmark interest rate unchanged for a second straight month, with Governor Perry Warjiyo defending the bank’s independence amid proposals to change its mandate. Bank Indonesia held the seven-day reverse repurchase rate at 4%. Policy makers are having to balance providing more stimulus against the risk of further weakening the rupiah, which is already down more than 6.6% against the dollar this year, the worst performer in Asia.

New Zealand Economy Shrinks the Most Since Great Depression

New Zealand suffered its worst economic slump since the Great Depression in the second quarter as a strict nationwide lockdown to combat the coronavirus brought the country to a standstill. Gross domestic product plunged 12.2% qoq, Statistics New Zealand said. That’s the biggest three-month contraction since quarterly records began in 1977. From a year earlier, the economy shrank 12.4%, the most recorded in comparable official data dating back to 1955.

Hong Kong’s August Jobless Rate Held at 6.1% Amid Recession

Hong Kong’s unemployment rate remained at 6.1% in August as the city’s businesses continued to struggle amid a prolonged recession and restrictions put in place to combat the coronavirus outbreak. This follows a surprise drop in the unemployment rate in July after nine straight months of increases.

Oil Jumps With Saudi Arabia Lambasting OPEC+ Laggards

Oil posted its largest three-day advance since May after Saudi Arabia forcefully renewed calls for OPEC+ members to adhere to their production quotas. Brent crude for November settlement advanced US$1.08 to US$43.30 per barrel.

Source: Affin Hwang Research - 18 Sept 2020