U.S. stocks closed higher Monday. U.S. second-hand home sales recorded the biggest monthly increase in history in May. While many U.S. states have re-tightened social segregation measures over the past week to contain the spread of the epidemic, the positive data have helped markets overcome the outbreak or hamper the U.S. economic recovery. The Dow closed up 580.25 points, or 2.32 per cent, at 25,595.80, the Nasdaq was up 116.93 points, or 1.20 per cent, at 9,874.15 and the Standard and Poor’s 500 index was up 44.19 points, or 1.47 per cent, at 3,053.24.
The National Association of Realtors (NAR) reported that the U.S. second-hand home sales contract index rose 44.3 percent month-on-month in May, the largest monthly increase on record since records began in 2001. The index rose to 99.6 per cent, but remained below February’s level of 111.4.
Boeing, the Dow component, closed up 14 percent. The Boeing 737 MAX has been tested for tubes and has begun recertification. Investors see the test as a key step in Boeing’s response to its worst-ever corporate crisis. In March 2019, the aircraft was grounded worldwide in two 737 Max crashes that killed 346 people in five months.
U.S. infections surge, many states retightening social segregation standards
As the number of cases of coronavirus infection has surged again, many U.S. states and cities have been forced to retighten social segregation standards and suspend and reverse the ongoing reopening process. This further disrupts economic activity and dampens investors’ venture capital appetite.
More cities have delayed plans to reopen this weekend. California Governor Gavin Newsom said Sunday that the state has ordered a ban on the re-opening of bars in seven counties, including Los Angeles. Given the rapid spread of the coronavirus epidemic in California, he also suggested that eight other counties in the state also reopen bars.
In addition to California, States such as Texas and Florida ordered the temporary closure of bars last week. Texas has also ordered some counties in the state to suspend non-emergency surgery to free up medical resources for an increasing number of patients infected with the coronavirus.
Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, says the coronavirus vaccine is about 70 to 75 percent effective, adding that many Americans say they won’t be vaccinated, making it “unlikely” that the U.S. will get a mass immunization.
U.S. Health Secretary Azar warned Sunday that the “window is closing” for U.S. action to curb the spread of the virus, and he predicted that deaths and hospitalizations from the virus will continue to rise in the coming weeks.
“Although the situation is different from two months ago, we still face a very serious new situation, ” Mr Azhar said. If Americans are not responsible for their actions and don’t guarantee social distance, if we don’t wear masks and don’t develop effective personal hygiene habits, we’ll see the epidemic continue to spread. “
“We suspect that most forecasters have been assuming a smooth rebound across the U.S. economy,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics Macroeconomics. That’s what we are. That now seems unlikely. It will take at least a month or so for the southern states of the United States to reopen, as changes in behavior patterns and retightening restrictions keep the number of new infections and hospital admissions significantly lower. That means the U.S. economy will be very weak in the first month of the third quarter. “
Over the weekend, more than 10 million cases of coronavirus were confirmed worldwide and more than 500,000 deaths, according to Johns Hopkins University.
U.S. second-hand home sales sign-up index rose 44.3% in May, the biggest monthly increase on record
The National Association of Realtors (NAR) reported Monday that the U.S. second-hand home sales sign-up index rose at an all-time high in May. The second-hand housing contract sales index rose 44.3 percent month-on-month in May, more than double the market expectation of 19.3 percent and well better than the 21.8 percent drop in April.
However, affected by the outbreak, the second-hand home sales contract index in May was still down 5.1% from a year earlier, and recorded a third consecutive month of year-on-year declines.
Lawrence Yun, chief economist at NAR, said: “There was an amazing recovery in the number of second-hand home sales in the US in May, showing the resilience of U.S. consumers and their desire for home ownership as before. The rebound also suggests that the housing market could lead to a broader economic recovery. “
Later in the week, investors will welcome a series of new economic data, including Thursday’s June nonfarm payrolls report and the same day’s initial jobless claims for the week. The market averaged 1.336 million until the week ended June 27, slightly better than last week’s 1.48 million.
“Last week’s data showed a slight improvement in both initial claims and continued unemployment benefits in the United States, suggesting that the labour market may not have made much progress since may have eased unexpectedly after the May nonfarm payrolls data unexpectedly exceeded expectations,” Deutsche Bank economist Brett Ryan wrote in a note. “
He added: “While there is certainly some disconnect between last week’s initial unemployment claims data and nonfarm payrolls data, both data show that not only are new unemployed workers not returning to work quickly, but they are out of work for longer periods of time.” “
The U.S. bureau of labor statistics reported last month that the unemployment rate in May was 13.3 percent, better than expected, up from 14.7 percent in April, and nonfarm payrolls rose 2.509 million, much better than expected. But the bureau later said the unemployment rate had been a mistake in the statistics process, with the real unemployment rate in May after the correction at least 16%, about three percentage points higher than the actual release.
Morgan Stanley: Outbreak of second wave won’t hinder economic recovery
Morgan Stanley economists believe the second wave of global outbreaks will not hinder economic recovery.
Morgan Stanley economist Chetan Ahya said that with the number of cases of coronavirus infection soaring globally in recent weeks, investors are most concerned about “a V-type rebound in the number of cases of coronavirus infection will not affect the V-shaped recovery of the economy and markets.” “He thinks the answer is, of course, no.
He said the global economy was expected to return to pre-coronavirus levels in four quarters, and developed-country market economies would catch up with previous levels after eight quarters.
Chetan Ahya said it was true that the number of new cases had risen again, but it would not hinder the recovery. In key areas where new cases are rising in the United States, government officials are beginning to respond, including wearing masks and keeping social distance. In the short term, these measures will cause some economic slowdown, but they will inhibit the further spread of the epidemic and help other states to recover. The study found that social distance from this requirement did not reduce consumer spending, corresponding to consumer goods, eating out and travel spending decreased, but other categories of consumption increased.
In the United States, for example, the top 20 states with GDP have made some progress, such as a gradual recovery in business activity, but the number of new cases has not risen significantly. In other words, people are beginning to explore a new model that can restore economic activity without a significant increase in new cases. And, as the Northwest is opening up, the U.S. economy is expected to gain a boost.
He also noted that news on coronavirus treatment and vaccines remained encouraging. Biotech analyst Matthew Harrison says the antibody treatment is likely to be successful and available by the end of August.
Second, Morgan Stanley does not believe that rising unemployment will dampen the recovery in consumption. Investors are often worried that a surge in unemployment will lead to a squeeze on consumption. Chetan Ahya says the correlation between the labor and consumer markets is not as close as common sense suggests.
During the 2008 financial crisis, U.S. consumption levels returned to pre-crisis levels in the third quarter of 2010, and the unemployment rate fell only 50 basis points from a peak of 9.5 percent. Similarly, in Europe, consumer levels returned to pre-crisis levels in the fourth quarter of 2010, while unemployment hovered around 10 per cent.
Facebook rose 2.1 percent and Twitter rose 1.5 percent. Several advertisers have reportedly suspended advertising on both platforms.
Gilead Sciences announced that The five-day treatment in Redsewe is $2,340, and Redsewee is priced at $390 per vial in developed countries.
Credit Suisse downgraded AMC’s line to a losing market.
Goldman Sachs upgraded Southwest’s stock rating to buy from a sell.
Shale oil pioneer Chesapeake Energy has been suspended and the company has recently filed for bankruptcy protection.
BP is selling its petrochemical business to European oil company Ineos for $5bn.
Barclays raised Spotify’s target price from $180 to $300.
Monness Crespi Hardt raised Amazon’s target price from $2,800 to $3,500.
Guo Ming, an analyst at Tianfeng International, 錤 a new report that shows that Apple’s new iPhone 12 is expected to eliminate randomly attached chargers and headphones to cut costs.
Asia-Pacific shares closed down 1.01 per cent on Monday, with the Hang Seng closing down 1.01 per cent, the Nikkei down 2.3 per cent, South Korea’s KOSPI 200 down 1.93 per cent and Australia’s ASX 200 down 1.51 per cent.
European stocks closed higher, with the SToxx 50 index up 0.88 per cent at 3,232.25, Germany’s DAX up 1.19 per cent at 12,233.60, Britain’s FTSE 100 up 1.01 per cent at 6,226.40 and France’s CAC 40 up 0.73 per cent at 4,945.46.
Gold futures closed higher on Monday. Evidence that the coronavirus infection is spreading rapidly has given gold prices a boost from safe-haven buying. But investors’ concerns about possible weakness in industrial demand have weighed on silver futures.
“Increasing risks in the global risk asset market and falling sovereign bond yields continue to push capital towards gold,” Ipek Ozkardeskaya, senior analyst at Swissquote Bank, wrote in a research note on Monday. “
Gold futures for August delivery rose 90 cents, or 0.05 percent, to $1,781.20 an ounce on the New York Mercantile Exchange. Gold futures have risen about 17 per cent so far this year.
Silver futures for July delivery fell 5 cents, or 0.3 percent, to $17.98 an ounce.
Silver futures for September, the most active, fell 10 cents, or 0.6 percent, to close at $18.064 an ounce.
Crude oil futures closed higher Monday, buoyed by a recovery in demand for crude oil. But with more than 10 million confirmed cases of coronavirus worldwide, the recovery in crude oil demand is still under threat.
Manish Raj, Chief Financial Officer of Velandera Energy, said: “With the recovery in global demand for crude oil, oil prices are naturally inclined to rise because they are currently below the break-even levels of most oil producers. “
Markets received upbeat economic data over the weekend from China, the world’s largest importer of crude oil. Official figures over the weekend showed industrial profits in China rose 6 per cent year-on-year in May, the first increase in 2020.
There are also signs that crude oil production will slow further. “Overall, the number of active crude oil drilling by Domestic crude producers in the U.S. is down 73 percent year-on-year,” Raj said. “So oil prices have returned to an upward trend.
Despite this, Raj said: “Last week the U.S. Energy Information Administration reported that U.S. crude oil production increased by 500,000 barrels per day last week, which is the biggest negative factor under pressure on oil prices. Traders are now concerned that at least some of the de-production wells could quickly reopen, undermining the current recovery in oil prices. “
West Texas Intermediate (WTI) futures for August delivery rose $1.21, or 3.1 percent, to close at $39.70 a barrel on the New York Mercantile Exchange. The futures were down 3.4 per cent last week.
Brent crude for August delivery rose 69 cents, or 1.7 percent, to close at $41.71 a barrel on the London-based Intercontinental Exchange. The futures were down 2.8 per cent last week. August Brent crude futures will expire after Tuesday’s close.