Russian economy ministry issues revised forecasts
- 2021 GDP growth forecast up to 3.8% from 2.9%
- lifts Urals oil price forecast to $65.9/bbl from $60.3/bbl
- 2021 inflation forecast to 5% from 4.3%
- 2021 capital investment growth forecast to 4.5% from 3.3%
- 2021 average dollar/rouble rate to 72.8 from 73.3 seen in April
The ministry comments on the higher forecasts:
- We see the economy is recovering faster than we had expected
- Our experts say the economic recovery potential is not exhausted yet
On the currency:
- We all realise that the rouble price should be different at oil prices of $75 per barrel
- current rouble weakness blamed on sanction risks, OPEC+ uncertainty around global oil output.
Russia’s inflation target is 4%, the latest reading has it at 6.5%. Russia’s central bank is expected to raise its key rate again from 5.5% on July 23.
USD/RUB daily chart:
Moody’s cuts the United Kingdom
This isn’t entirely unexpected but you hate to see it. Fitch recently affirmed the UK at AA-, which is the equivalent of Aa3. S&P remains one notch higher at AA but it’s under review.
Moody’s cited three reasons for the sovereign downgrade:
What is next for the dollar?
If one could describe the Dollar’s performance over the past few months in one word, the best fit would be vulnerable.
The once king of the FX space has weakened considerably in Q3, depreciating against every single G10, most Asian and emerging market currencies. This is despite its safe-haven status and the global reserve currency title. For those who are wondering why the Greenback remains depressed and unable to shake away the blues despite the general uncertainty, the first clues can be found in the US economy. (more…)
USD/JPY declines below 106.00
USD/JPY is at a six-day low as the pressure on the US dollar mounts. There is some broad-based weakness taking hold. It’s increasingly becoming the default mode in the market to sell US dollars, so long as there isn’t genuine risk aversion.
There’s nothing particularly negative for the US dollar today but there are headwinds:
- US election risk
- Lack of US stimulus will hurt relative growth
- Equity market valuation is richer in the US, better value elsewhere
- Long-term monetization/inflation worries
Here’s chart on M2 from Nordea comparing the US and Europe:
In the smaller picture, risk sentiment is good today and that’s good enough to undercut the US dollar.
As for USD/JPY, it’s not time to worry yet but the drop in late July is starting to look like a warning shot.
That brings the total confirmed cases in the country to nearly 2.4 million
India is among the countries that have been hit the hardest by the pandemic as the struggle to balance between the health crisis and the economic fallout is particularly stark.
As for the health crisis, the bright side is that over 1.6 million of those infected has recovered from the disease. However, the spread is still outpacing the number of recoveries:
At the start of July, India reported ~220,000 active cases in the country. That figure is now ~643,000. The only positive – if you really want to look at it that way – is that the mortality sits at just
~1.9%. That is better than the ~3.2% seen in Brazil and the US.
In the bigger picture, as long as the health crisis worsens in India, it will have an impact on the global economic situation in general. Before the pandemic, there have been talks that India’s share of global growth might rival that of US, China in the next decade.
They were already among the top five – some would argue top three – contributors of global growth over the past few years, so any major setback to India will also be a setback for the global economy in that sense.
The last 4 of 5 days have been to the upside for the major indices
The major indices are closing with solid gains on the day. The NASDAQ index closed at the highest level since February 21. Facebook and Amazon closed at record high levels. The S&P index is closing higher but after trading above its 100 day moving average at 2975.37, the pair has rotated lower and will close below its 100 day moving average at 2971.61. So that is a bit of a disappointment
The final numbers are showing:
- The S&P rose 48.67 points or 1.67% to 2971.61. The high reached 2980.29. The low extended to 2953.63.
- The NASDAQ index rose by 190.67 points or 2.08% to 9375.77. The high price extended to 9392.816. The low price fell 29304.199
- The Dow industrial average rose by 369.04 points or 1.52% to 24575.90. The high price extended to 24649.48. The low fell to 24455.94
some big gainers today included:
- Twitter, +7.83%
- Alcoa, +7.88%
- Deutsche Bank, +6.23%
- Facebook, +6.04%
- Wynn Resorts +5.88%
- Slack, plus a 5.7%
- Southwest air, +5.27%
- United Airlines, +5.24%
- Disney, +4.86%
- Intel, +4.69%
- Morgan Stanley, +4.4%
losers today included:
- Lockheed Martin, -2.46%
- Northrop Grumman, -1.94%
- Chewy, -1.62%
- J&J, -0.9%
- Merck and Company, -0.86%
- United health, -0.42%
- Verizon, -0.22%
- Pfizer, -0.13%
- Home Depot, -0.03%
NASDAQ and S&P index fall over -2%
The major stock indices tumbled lower into the close, with the NASDAQ and S&P index both closing over -2% on the day. The final numbers for the major indices are showing:
- S&P index -60.2 points or -2.05% at 2870.12
- NASDAQ index -189.79 points or -2.06% at 9002.55
- Dow -457.21 points or -1.89% at 23764.75
At the highs the:
- S&P index is up 0.53%
- NASDAQ index is up 0.64%
- Dow industrial average is up 0.66%
The small-cap Russell 2000 index fell by -2.85% after being up as high as +0.43%.
The Canadian TSX/S&P index fell -1.23%
European shares ended mixed with Germany, France, and Portugal moving lower while UK, Spain, and Italy rose.
All S&P sectors close lower.
The broader stock indices fell over 3% with the Nasdaq leading the way to the downside. The Dow 30 index fell -2.67%
The final numbers are showing:
- The S&P index fell -86.60 points or -3.07% at2736.60
- The Nasdaq index fell -297/49 points or -3.48% at 8263.23
- The Dow 30 stock index fel -631 points or -2.67% at 23018.88.
Netflix shares are higher after the close after subscriber numbers surged 15.8M vs est of 8.47M
The 1Q revenues came in at $5.77B vs $5.76B estimate. EPS came in at $1.57. They see 2Q rising to $1.81.
Prices recover in the last hour of trading
The major indices are closing lower but off the low levels for the day. The last hour of trading saw prices move higher. The major indices have moved lower in 3 last 4 trading days
The final numbers are showing:
- The S&P index fell -38.34 points or -1.52% at 2488.56. The high for the day reached 2538.18 . The low extended to 2459.96
- the NASDAQ index fell -114.225 points or -1.53% to 7373.08. The high price reached 7518.71.The low extended to 7288.11
- The Dow fell -357.99 points or -1.67% to 21055.49. The high price reached to 21 447.81. The low extended to 20863.09
For the week, the major indices all declined with the Dow industrial average falling the most. The changes for the week are showing:
- Dow -2.7%
- S&P -2.08%
- Nasdaq -1.72%
YTD, the Dow al so is leading the declines:
- Dow -26.23%
- S&P, -22.97%
- Nasdaq, -17.83%.