Gold Set for Weekly Gain
Spot gold traded around $1,950 an ounce on Friday and was on track to book a 0.5% weekly gain amid a subdued dollar due to overall uncertainty about the economic outlook and fears of a prolonged pandemic. Gold prices rose 28% so far this year amid unprecedented monetary stimulus and expectations of a prolonged period of ultra-low interest rates and currency debasement.
US Consumer Sentiment Highest in 6 Months
The University of Michigan's consumer sentiment for the US jumped to 78.9 in September from 74.1 in August, beating market expectations of 75. It is the highest reading since March, preliminary estimates showed. While the recent gain was consistent with an unchanged flat trend, the data indicated that the election has begun to have an impact on expectations about future economic prospects. September gains were primarily in the outlook for the economy, and it was Democrats that posted gains in economic prospects while optimism about the economy weakened among Republicans. The consumer expectations subindex rose to 73.3 from 68.5 and the gauge for current conditions went up to 87.5 from 82.9. Inflation expectations for the year ahead declined to 2.7% from 3.1% and the 5-year outlook went down to 2.6% from 2.7%. Over the next several months, how the election is decided and the delays in obtaining vaccinations will weigh on consumer sentiment.
Crude Oil Pares Losses, Heads for Weekly Gain
WTI crude pared early losses to trade around $41.2 a barrel on Friday, as investors try to shrug off Libyan commander Khalifa Haftar comments that a blockade on Libyan oil exports would be lifted. Supporting prices further were Goldman Sachs’ market projections and a new storm building in the US Gulf of Mexico. In a report the bank predicted the market would be in a deficit of 3 million barrels per day by the fourth quarter. On Thursday, Saudi Arabia pledged full compliance with the cuts, putting pressure on the alliance's quota violators, to extend the compensation period from September until the end of December. For the week, WTI crude is on track of a 10% weekly gain, its largest since June, as Hurricane Sally forced US producers to shut production in the Gulf Coast.
Commodities: Natural gas +2.18%, Palm Oil +1.89%
Top commodity gainers are Natural gas (2.18%), Palm Oil (1.89%) and Aluminum (1.64%). Biggest losers are Platinum (-1.18%), Coffee (-1.06%) and Silver (-1.00%).
UK Stocks Lower Despite Upbeat Economic Data
The FTSE 100 extended losses to trade around 6,010 on Friday afternoon with the travel and leisure sector facing one of its worst trading day since June, amid talks of another possible lockdown in the UK in October and as Europe struggles to contain the pandemic. The World Health Organization warned on Thursday that Europe's weekly COVID-19 infections were higher than the first coronavirus peak back in March. At the same time, investors have little reason for cheer following key central bank meetings this week. The Bank of England, the US Federal Reserve and the Bank of Japan all reaffirmed their commitment to support their economies, but refrained from any policy changes. On the economic data front, Britain's retail sales came in better than expected in August, rising further above pre-COVID levels.
European Stocks Continue to Fall
European shares extended losses in afternoon trading on Friday with travel and bank firms among the worst performers, as investors fear that a resurgence in coronavirus cases across the continent could hamper its economic recovery. The WHO warned on Thursday that Europe's weekly COVID-19 infections were higher than the region's first coronavirus peak back in March. At the same time, investors felt disappointed about the lack of action from major central banks early this week. The US Federal Reserve pledged to keep interest rates at record lows, but did not signal further stimulus in coming months. Central banks in Britain and Japan hinted at additional monetary support, but action was not forthcoming either. On the corporate front, Germany's Covestro surged on the back of a Bloomberg report on PE interest for the group and despite having denied being in talks with Apollo. Caixabank and state-owned Bankia have approved a merger plan that will create the Spanish largest bank.
Ukraine's Economic Recession Confirmed in Q2
Ukraine's economy shrank 11.4 percent from a year earlier in the second quarter of 2020, entering a recession and in line with preliminary estimates. It was the steepest pace of contraction since the April to June period of 2015, due to the coronavirus pandemic. On a seasonally adjusted quarterly basis, the GDP slumped 9.9 percent, the most since comparable records began in 2010.
Canadian Stocks Trade in Positive Territory
The S&P/TSX Composite Index traded higher above the 16,200 level on Friday, rebounding from previous session’s losses boosted by upbeat domestic data. Latest figures showed Canada’s retail sales rose 0.6% over a month earlier in July, marking its third consecutive increase, amid the gradual resumption of business activities. The recovery in retail sales in June and July surpassed February's pre-pandemic levels. On the coronavirus front, starting today indoor social events in Toronto, Canada’s biggest city, along with Ontario’s Peel and Ottawa regions will be authorized to include no more than 10 people from a previous limit of 50.
Wall Street Trades Nearly Flat but Braces for Weekly Gain
US stocks traded nearly flat on Friday when single-stock options, single-stock futures, stock-index options and stock-index futures are set to simultaneously expire. This quadruple witching usually means more volatility during the session. Meanwhile, the Trump administration said it will block American users from downloading TikTok and WeChat starting Sunday, mentioning national security issues. Investors also try to shrug off a tech rout the day before and await further developments on more stimulus as Republicans and Democrats have not agreed yet on a new package; and the timing of a viable coronavirus vaccine. On the week, stocks are on track for the first weekly gain of the month.
Silver Prices Fall
Silver prices reversed gains and fell more than 1% to around $26.8 an ounce on Friday, despite a fall in investors' risk appetite as lingering concerns over an economic recovery from the damaged inflicted by the coronavirus pandemic persist.
Argentine Peso Hits All-time Low
USDARS increased to an all-time high of 75.37
Canada Retail Sales Rise for 3rd Month
Retail sales in Canada rose 0.6 percent over a month earlier in July 2020, following a downwardly revised record 22.7 percent gain in the previous month but below market expectations of a 1 percent increase. Sales were up in 6 of 11 subsectors, in particular at the motor vehicle & parts dealers subsector (+3.3%) on continued pent-up demand for motor vehicles following pandemic-driven dealership closures in the spring; gasoline stations (6.1%) on the back of higher gasoline prices, the continued reopening of the economy, and more Canadians travelling and buying locally; and clothing & clothing accessories stores (11.2%). Meanwhile, sales fell at food & beverage stores (-2.1%); general merchandise (-0.4%) and sporting goods, hobby and music (-8.8%). Overall, the recovery in retail sales has been V-shaped, with sales in June and July, rebounding and surpassing February's pre-pandemic levels. Statistics Canada also provided an early estimate of August's retail sales of a 1.1% gain.
Canada Wholesale Sales Rise More than Expected
Wholesale sales in Canada rose 4.3% over a month earlier in July of 2020, following an upwardly revised record 18.8% jump in June and beating market expectations of a 3.5% growth. Sales were up in 6 of the 7 subsectors, most of them having reached pre-pandemic levels, helped by the further reopening of the economy. Sales rose mostly for motor vehicle, motor vehicle parts & accessories (19.3%), in particular motor vehicles (24%), amid an increase in production due to adjustments made by auto plants to maintain production, including reducing the duration of usual summer shut down in July for maintenance. Other significant increases were recorded in sales of machinery & equipment (4%), personal & household goods (2%) and building materials (2%). The miscellaneous subsector posted a 0.5% decrease. In July, nine provinces recorded higher wholesale trade sales, led by Ontario (5.3%), British Colombia (7.9%), and Quebec (1.6%). Year-on-year, wholesale sales increased 0.7%.
US Current Account Gap Widens more than 50% in Q2
The current account deficit in the US widened by $59 billion, or 52.9%, to $170.5 billion in Q2 2020, the biggest gap since Q3 2008. It is equivalent to 3.5% of the GDP, compared to 2.1% in Q1. It mostly reflects an expanded deficit on goods and reduced surpluses on primary income and on services. All major transactions declined in part due to COVID-19, as many businesses were operating at limited capacity or ceased operations, and the movement of travelers across borders was restricted. Exports went down mainly due to petroleum and products; civilian aircraft; parts and engines and passenger cars; and services of travel and air passenger transport. Receipts of primary income also went down mostly due to equity securities and primarily earnings. Receipts of secondary income fell due to primarily private sector fines and penalties and payments dropped on lower primarily private sector fines and penalties, and in general government transfers, primarily international cooperation.
Volatility Expected on Wall Street on Friday
US futures attempted to gain ahead of the quadruple witching on Friday, when single-stock options, single-stock futures, stock-index options and stock-index futures expire on the same day, which usually means more volatility during the session. Meanwhile, the Trump administration said it will block American users from downloading TikTok and WeChat starting Sunday, mentioning national security issues. Investors also try to shrug off a tech rout the day before and await further developments on more stimulus as Republicans and Democrats have not agreed yet on a new package; and the timing of a viable coronavirus vaccine. Considering Monday-Thursday, the Dow Jones added 0.9% and the S&P 500 and the Nasdaq 0.5% each. On Thursday, the Dow Jones lost 131 points or 0.5% to 27,902. The S&P 500 retreated 29 points or 0.8% to 3357. The Nasdaq dropped 140 points or 1.3% to 10,910.
Russian Ruble Set for Weekly Loss
The Russian ruble depreciated slightly to $75.3 on Friday and was set for a 0.7% weekly loss, pressured by falling oil prices and as policymakers left the door open to further interest rate cuts in upcoming monetary policy meetings. Still, the central bank held its benchmark interest rate at 4.25 percent during its September meeting. The benchmark Brent crude fell more than 1% to $42.8 a barrel on Friday but was on track for a weekly gain. The currency has been pressured by political risks related to the crisis in Belarus, the suspected poisoning of Alexei Navalny, and by a drop in daily sales of foreign currency by the finance ministry.
Brent Crude Drops, Still Heads for Largest Weekly Gain since June
Brent crude prices pared early gains to trade below $43 a barrel on Friday, after Libyan commander Khalifa Haftar said that a blockade on Libyan oil exports would be lifted. Earlier gains were supported as Goldman Sachs projected that the market is in deficit and as new storm is building in the US Gulf of Mexico. The bank estimated the market would be in a deficit of 3 million barrels per day by the fourth quarter and reiterated its target for Brent crude to reach $49 by the end of the year and $65 by Q3 2021. Meantime, Saudi Arabia pledged full compliance with the cuts on Thursday’s OPEC+ meeting, putting pressure on the alliance's quota violators to extend the compensation period from September until the end of December. Still, for the week the Brent crude gained over 7% so far and is on track to record the biggest weekly gain since June, as Hurricane Sally forced US producers to shut production.
WTI Crude Falls, Still Heads for Weekly Gain
WTI crude futures erased early gains to trade around $40.6 a barrel on Friday, after Libyan commander Khalifa Haftar said that a blockade on Libyan oil exports would be lifted. Haftar’s comments came after Libya’s National Oil Corporation said it would not lift force majeure on exports until oil facilities were demilitarised. Earlier in the session, the WTI crude touched $41.48 a barrel, on the back of Goldman Sachs’ market projections and a new storm building in the US Gulf of Mexico. In a report the bank predicted the market would be in a deficit of 3 million barrels per day by the fourth quarter. On Thursday, Saudi Arabia pledged full compliance with the cuts, putting pressure on the alliance's quota violators, to extend the compensation period from September until the end of December. Still, for the week the WTI crude is on track of an over 8% weekly gain, its largest since June, as Hurricane Sally forced US producers to shut production in the Gulf Coast.
Bangladesh August Inflation Rate Ticks Up to 5.68%
The annual inflation rate in Bangladesh rose to 5.68 percent in August of 2020 from 5.53 percent in the prior month, as food prices advanced faster (6.08 percent vs 5.70 percent in July). Meanwhile, non-food inflation slowed (5.05 percent vs 5.28 percent). On a monthly basis, consumer prices inched up 1.38 percent, after increasing 0.78 percent in the previous month.
South African Stocks Fall for 4th Day
The South Africa FTSE/JSE Africa All Shares Index erased some early gains and fell 0.7% on Friday, extending losses for a fourth day, the longest losing streak since June 11. The heavyweight retailer Richemont led the losses and banking shares also fell, after Investec said that expects first-half profit to slump as much as 68% largely due to the coronavirus crisis. Meanwhile, optimism surrounding the further easing of lockdown restrictions helped to moderate market sentiment. For the week, the benchmark index is set to fall 2.6%.
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