Archives of “August 27, 2020” day

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European shares end the day lower.

  
Analysis, Global Indices

Erase gains from yesterday’s trading

Yesterday, European shares moved to the upside with gains between 0.1% (UK FTSE 100) and 1% (German DAX).
Today the major indices are ending the day lower across the board. The provisional closes are showing:
  • German DAX, -0.7%
  • France’s CAC, -0.7%
  • UK’s FTSE 100, -0.6%
  • Spain’s Ibex, -0.6%
  • Italy’s FTSE MIB, -1.0%

In the European debt market, the benchmark 10 year yields reversed earlier declines and are currently trading up 0.2 basis points to up 3.8 basis points:

Erase gains from yesterday's trading_As the London/European traders look to exit, the CAD is the strongest while the JPY is the weakest. The USD has seen volatile up and down trading but is still trading mostly higher but with most of the gains vs. the JPY and EUR. The greenback is lower vs. the CAD, and near unchanged vs. the GBP, CHF, AUD and NZD (all are within 0.07% of unchanged on the day).

US initial jobless claims 1006K vs 1000K estimate

  
  Analysis
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US initial jobless claims and continuing claims

  • initial jobless claims 1006K vs 1000K estimate
  • jobless claims four-week average 1068K vs 1175.25K last week
  • continuing jobless claims 14535K vs 14400K estimate
  • continuing claims four-week average 15215K vs 15819.75 last week
Initial jobless claimsThe claims data continues to disappoint with the weekly numbers back above 1 million for the 2nd week in a row after dipping below for one week early in August (to 971).
Continuing claims also was slightly higher than expectations. Nevertheless it was still lower vs. the last week’s revised 14758K number.

US Q2 GDP second reading -31.7% vs -32.5% expected

  
Analysis, Economy
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The second reading on Q2 gross domestic product

US GDP second reading Q2 2020
  • The first estimate was -32.9%
  • Q1 was -2.5%
  • Final sales -28.5% vs -29.3% prelim
  • Business investment -26.0% vs -27.0% prelim
  • Consumer spending -34.1% vs -34.6% prelim
  • Exports -63.2% vs -64.1% prelim
  • Imports -54.0% vs -53.4% prelim
  • Inventory change -$286.4B vs -$315.5B prelim
  • GDP deflator -2.3% vs -2.0% expected
  • Full release
Despite the headline, there’s more good news here than bad. The revision higher in inventories means that inventory rebuilding will be less of a tailwind in Q3 and Q4 than anticipated. The drop in inflation also added to real GDP.
“In the second estimate, real GDP decreased 31.7 percent in the second quarter, an upward revision of 1.2 percentage points from the previous estimate issued last month. The revision primarily reflected upward revisions to private inventory investment and PCE,” the BEA said in the release.

China says that US sanctions are a gross interference of its internal affairs

  
  Analysis

Comments by the Chinese foreign ministry

  • US sanctions are unjustified
  • Says US defense secretary, Mark Esper, is talking nonsense
  • Affirms that China abides by international laws, UN conventions
This relates to the latest escalation between the two countries involving the South China Sea as seen yesterday here. But as long as tensions continue to just play out slowly and not lead to a breakdown in the Phase One trade deal, this is petty stuff for markets.
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