There still seems to be a fine balance struck between whether markets lean positive or negative on any given session. Sentiment fluctuates between bullish and bearish. Hopes for vaccine and treatment drugs are still able to boost sentiment, but the traction seems to be limited now. The weight of concern comes with the economic impact on the US economy from rising COVID-19 infection rates. Consistently over 60,000 new cases per day, is driving the need to reverse re-opening measures. The state of California closing bars, restaurants and other businesses is a concern for retail sales recovery and consumer confidence. The data for July and as Q3 develops is likely to reflect this and scale back expectations of economic recovery. Add in a dose of concern over the tit-for tat relations between the US and China over Hong Kong, interests in the South China Sea and Huawei. The risk recovery has been built for perfection and with reinfections growing in the US, it seems that a China recovery needs to be a heavy lifter for the global economy again. China trade data out overnight has been encouraging, but Singapore reported a larger than expected decline in Q2 GDP and a move into recession for the first time since 2009. UK GDP for May has also disappointed, a data miss driven by underperformance by the dominant services sector. Any good news on the economic data front that markets were served in the past month, seems to be running dry. At the least, this makes it much harder for the risk rally in the weeks ahead.
Wall Street fell sharply into the close, weighed down by a drop in tech stocks, with the S&P 500 -0.9% at 3155. Even though US futures have rebounded slightly today (E-mini S&Ps +0.5%) there has been pressure through Asian markets, with Nikkei -0.9% and Shanghai Composite -0.9%. In forex, there is a mixed look to major pairs, with little real theme, however, with US Treasury yields lower this should suggest a weight on risk appetite. In commodities, gold and silver have slipped slightly in early moves, whilst oil is around -1% lower.
It seems a while since there was any economic announcements of note but given the releases earlier this morning and also due later, the economic calendar has a pretty steady stream of data today. The German ZEW Economic Sentiment at 1000BST is expected to slip back slightly in July, back to 60.0 (from 63.4 in June). This deterioration comes despite a continued pick up in the ZEW current conditions component which is expected to recover further in July to -65.0 (fr