(03 JULY 2020)DAILY MARKET BRIEF 1:Equities supported by solid NFP, Chinese PMI

(03 JULY 2020)DAILY MARKET BRIEF 1:Equities supported by solid NFP, Chinese PMI

3 July 2020, 09:35
Jiming Huang

Investors only had eyes for the 4.8 million rise in US nonfarm jobs last month, although the average earnings slipped 1.2% versus -0.8% expected by analysts and the jobless claims remained close to the 20 million mark.

Meanwhile, the virus news were not that charming, as cases and casualties jumped to the highest in Florida, and the director of the National Institute for Allergy and Infectious Diseases Anthony Fauci warned that the virus may be mutating to spread quicker.

Major US equity indices closed the holiday-shortened week on a positive note. The Dow (+0.26%) and the S&P500 (+0.45%) gained as Nasdaq (+0.52%) reached a new record.

Following the V-shape correction in the US stock markets and record highs, investors see minor risk of a sustainable debasement in the world’s biggest and immensely supported financial markets.

The latest sell-off attempts have been cut short by decent dip-buying interest. A part of this behaviour is certainly because investors lost their hold on the reality on blurred stock valuations – although we know that many of them have been sharply scaled down to meet the pandemic hit business conditions. But most of the optimism is explained by central banks and governments’ combat to maintain prices artificially bloated hoping that the pandemic would have a less damaging impact on the real economy if they maintained a ‘healthy’ financial system. If the stocks have such an infallible pacemaker, why bother selling?

On the data deck, the Caixin services PMI pointed at the fastest expansion in a decade as the EM giant accelerated the pace of economic activity to tackle the Covid-led slowdown. The second wave worries didn’t have a material impact on PMI figures, which was very good news for investors.

Activity on European futures point at a flat Friday open. The FTSE 100 is expected to consolidate and progress following the strong Thursday session gains.

By Ipek Ozkardeskaya

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