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Daily Market Update

Latest Economic & Market Update 17th June 2020

Good afternoon, it is 17th June 2020 and here is your economic and market update from BlackBee.

Today we focus on:

  • Stocks continue their rally on the back of further positive economic data.
  • US retail sales rebound in May.
  • Jerome Powell stresses the uncertainty around economic recovery.

US stocks continued their rally after the FEDs announcement that it will be buying individual corporate bonds, supported by the release of positive retail sales data.

With the lag between market opening hours, European stocks rallied, responding to Monday’s FED announcement that they were starting to purchase individual corporate bonds. News that the Trump administration is planning a $1 trillion infrastructure bill added to the positive mood of investors. Despite closing positive for the day, stocks pulled back from some of their highs on the as Beijing raised emergency responses due to new coronavirus cases.

US retail sales rebounded by +17.7% in May, the biggest monthly gain since records began in 1992. In comparison to the same period last year, sales are down -6.1%. Both March (-8.2%) and April (-14.7%) had previously set new records for the worst monthly decline in sales on record. The increase in retail sales comes as states reopen their economies and 2.5 million people began working again last month. Federal support regarding direct deposits into household bank accounts will have been a major support for the increase in sales, as a large number of Americans remain unemployed.
 
Following releases of encouraging economic data sparking hope among investors that the recovery may be quicker than expected, Jerome Powell, Chair of the Federal Reserve, stressed the uncertainty around the timing and strength of the recovery.

Powell kept a cautious tone as he highlighted that output and unemployment levels remain far below the levels seen pre-crisis. Recently the US and China have seen an uptick in coronavirus cases as concerns over a second wave of coronavirus grows. This was highlighted as the biggest threat to recovery due to the uncertainty about the path the coronavirus will take, and Powell stated that full recovery is unlikely until the virus is contained.

The tone from the Federal Reserve Chair was in line with the FED’s view that interest rates will remain near 0 until 2022.

Although economic data has been better than expected, there is still a long road to recovery.

Best & Worst Performers of Large Cap Stocks on Tuesday
Click the image to enlarge

 

Global Market Update
(as at close of markets 16/06/2020)