Weekly Market Insight

Latest Economic & Market Update 1st July 2020

01st July 2020

Good afternoon, it is 1st July 2020 and here is your economic and market update from BlackBee. 

Today we focus on:

  • US Stocks record best quarter performance since 1998
  • Consumer confidence rising in the US but may be vulnerable to a further drop
  • Additional stimulus from the US Government aimed for end of July

The S&P500 rose nearly 20% since the end of March, marking its best quarter since 1998. The index is up 38.5% since lows in March. The Dow Jones also recorded its best quarter since 1987, up nearly 18%. In Europe, the Euro Stoxx 600 increased by 12.6% during the quarter. Stimulus from Central Banks and better than expected economic data stabilised markets and influenced the rally. The rally has now cooled amid growing concerns about the rise in cases and the reversal in plans for reopening economies.

The Conference Board’s index on US consumer confidence hit a three-month high in June and made its biggest one month gain since 2011. The reading came in higher than consensus estimates for June, increasing by 12.2 points to 98.1, up from 85.9 in May. The future expectations index also rose to 106, up from 97.6 in May. Although sentiment remains far below levels seen pre-crisis, it indicates that optimism was growing among American people as the economy reopened. However, the cut off for the survey was June 18th, before the surge in cases and the rollback in reopening of some state economies. As a result, July’s figures may show a decrease in confidence again as the uncertainty of the pandemic continues.

Testifying to the House Panel on Tuesday, the FED chair Jerome Powell, stressed the importance of containing the virus as the US entered a new phase of reopening the economy. Despite moving to a new phase of the recovery the FED is still preparing for the possibility of a second wave that could further harm the economy. The Secretary of Treasury Steve Mnuchin was questioned on government support through the Paycheck Protection Programme for small businesses. The deadline for forgivable loans under the Paycheck Protection Programme was Tuesday (June 30th) with approximately $134 million in funds still available. Mnuchin stated that they can repurpose the money remaining in the fund after the deadline to hotels and restaurants. Republicans have been holding off on any additional stimulus as they hoped the economy was improving, however, Mnuchin stated that they are hoping a new round of stimulus will be passed by the end of July.

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

Global Market Update
(as at close of markets 30/06/2020)