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Nikkei 225 closes lower by 1.41% at 22,882.65

The Nikkei slides in the final hour as Abe plans to resign

Nikkei 28-08

Japanese stocks were faring better on the day, rising alongside its peers in the region, before reports came in that Abe is to resign as prime minister. That sent Japanese markets into a risk-off spin, though the reaction outside of Japan is rather muted.

The Nikkei tumbled by as much as 2.5% at one stage but has trimmed losses since.
Elsewhere, the Hang Seng is up 1.4% and the Shanghai Composite is up 1.1%. Meanwhile, US futures are up by 0.4% as we look towards European morning trade.
In the currencies space, the dollar is on the back foot across the board as it extends losses post-Powell. The yen was also weaker initially as yields were rising but the Abe news helped the currency to turn losses into gains against the dollar.

Japan prime minister Shinzo Abe reportedly plans to resign due to health reasons

NHK reports on the matter

The yen has strengthened on the headline here with USD/JPY falling from 106.70 to a session low of 106.21 as the Nikkei takes a tumble, falling by over 1% now.

NHK reports that Abe is planning to resign due to health reasons and wants to avoid disruptions to the government due to his illness. This goes against prior reports that he is expected to carry on with his incumbent position until next year.

Economic data coming up in the European session

A little messy ahead of the weekend

Depending on how you want to look at it, there are a few key takeaways from Fed chair Powell’s speech yesterday. The most important one is that he mainly reaffirmed that low rates are here to stay for longer as the Fed moves to ‘average’ inflation targeting.

But is that story really anything new? The market had some sense that the Fed isn’t going to raise rates over the next five years potentially and this cements those expectations.
The bigger story might have been that they want to gain a further edge in the “race to the bottom”, offering quite a lot of vagueness about policy views in general.
In some sense, the Fed basically said that it will interpret the economic and market situation so long as it fits their policy needs at any given point in time.

(more…)

The EU has warned Boris Johnson he has less than two weeks to save post-Brexit trade and security talks

The UK Times with the worrying news, citing senior European Union sources.

  • The UK PM has been warned he has less than two weeks to save post-Brexit trade and security talks
  • Michel Barnier and David Frost, the UK’s chief negotiator, will hold emergency talks next week in an effort to save the negotiations, The Times understands.
  • Mr Barnier, the EU’s chief negotiator, told the government last week that negotiations will not move forward until Mr Frost explains what Britain’s future policy will be on industrial subsidies.
  • In an angry response, the prime minister’s negotiator hit back, telling the French former European commissioner that Britain would not draw up such a key economic policy on a “timetable dictated to” by the EU.
Times may be gated.
The UK voted to leave what, more than 4 years ago? And Frost is whining about the timetable being dictated. What, no one could have seen this coming … ?
The UK Times with the worrying news, citing senior European Union sources. 

EU paid 336m EUR downpayment to AstraZeneca to secure at doses of potential COVID-19 vaccine

An overnight piece ICYMI on the UK coronavirus vaccine developer AstraZeneca

European Commission statement that AstraZeneca agreed to sell 300 million doses for 750 million euros was made earlier in June.
EU has also secured an option to buy 100 million additional doses of the vaccine under development
AstraZeneca has already reached a deal with the US for 300m shots for $1.2 billion
and of up to 30m doses to the UK for 65.5m GBP

Trump to announce a $750m deal to buy 150m rapid Covid-19 tests from Abbott Labs

White House senior adviser Alyssa Farah:
  • “This is a major development that will help our country to remain open, get Americans back to work and kids back to school”
No schedule has been set for Trump’s announcement.
Abbott said it plans to ship tens of millions of the tests in September
expects to increase production to 50 million tests in October
Thursday in Asia time brought news of the rapid test receiving approval:

S&P index close at record level. NASDAQ string of record closes comes to an end

5 days in a row of record closes comes to an end for the NASDAQ

Well, the S&P index close at a record level, but could not push above 3500 at the close. It has closed higher for 6 consecutive days. The NASDAQ index failed to extend its 5 day record close string. It fell in trading today. The Dow industrial average also failed to close positive for the year for the 1st time since February 21.

The final numbers are showing:
  • S&P index rose by 5.86 points or 0.17% at 3484.60
  • NASDAQ index fell -39.725 points or -0.34% at 11625.33
  • Dow industrial average rose 160.22 points or 0.57% to 28492.05. It closed -0.16% from the end of 2019 level of 28538.
Airlines and financials did well today.
For the airlines:
  • United Airlines, +5.75%
  • American Airlines, +3.79%
  • Southwest Airlines, +3.49%
  • Delta Air Lines, +2.87%
For the financials:
  • J.P. Morgan, +3.28%
  • Wells Fargo, +2.27%
  • PNC financial, +2.01%
  • Bank of America, +1.96%
  • Charles Schwab, +1.89%
  • Morgan Stanley, +1.74%
  • Citigroup, +1.73%
  • Goldman Sachs, +1.39%
Other oversize winners today included:
  • Box, +4.87%
  • Walmart, +4.55%
  • Marriott, +4.54%
  • Tesla, +4.02%
  • Stryker, +3.85%
  • Northrop Grumman, +2.23%
  • Slack, +2.05%
  • Uber, +1.55%
  • Salesforce, +1.48%
  • Ford, +1.47%
  • MasterCard, +1.42%
  • General Dynamics, +1.37%
Losers today included:
  • Netflix -3.84%
  • Facebook -3.543%
  • Adobe, -3.34%
  • AliBaba, -2.67%
  • AMD, -2.53%
  • Chewy, -2.45%
  • Twitter, -1.66%
  • Exxon Mobil, -1.33%
  • Corning, -1.29%
  • Amazon, -1.26%
  • Apple, -1.19%