US equities have lost ground on Thursday, after rallying for two days on optimism around Moderna’s vaccine. The S&P 500 (-0.34%) has been dragged down by Apple and Microsoft, among others, as the higher-than-expected number of jobless claims reflected the economic damage from rising COVID cases.
The US Labor Department said that the number of initial unemployment benefits dropped by 10,000 to 1.310 million in the previous week, while analysts anticipated a decline to 1.25 million.
On the positive side, US retail sales beat expectations in June – up 7.5% vs. expected 5.0%. However, Thursday’s record increase in coronavirus cases is hindering the recovery. California and other states have been forced to introduce strict lockdown measures again.
Dow Jones fell 0.50%, and Nasdaq dropped by 0.73%. The S&P and Dow are still slightly higher than Monday levels, unlike Nasdaq.
Asian stocks are mixed, with some markets ending the week on a high note. Investors are pricing in the expectations of more stimulus from governments around the world. In the US, some existing stimulus programmes are about to expire at the end of July, and investors hope that policymakers would green-light more support schemes. The US Congress is set to discuss the new measures next week.
At the time of writing, Hong Kong’s Hang Seng Index is up 0.59%. Japan’s Nikkei 225 is down 0.29%, while South Korea’s KOSPI has gained 0.69%.
China’s indices turned bearish after initial gains. The Shanghai Composite is down 0.51%, and the Shenzhen Component has dropped 0.25% after surging over 2%. Investors are monitoring the worsening tensions between the US and China. Washington is seriously considering to ban all members of China’s Communist Party and their families from entering the US.
The ASX 200 is down 0.10%, after earlier gains. Melbourne saw a record increase in COVID cases even though it reimposed strict lockdown measures last week.
European equities will open higher as FTSE and DAX futures are flashing green.
In individual corporate news, Morgan Stanley’s share price added 2.5% after the banking giant reported record quarterly profits. The bank’s trading unit saw a 68% surge in revenue, driven by a 168% increase in bond trading. Elsewhere, Bank of America dropped 2.7% after reporting a nearly 50% drop in second-quarter profit.
Twitter fell 1.1% after probably the greatest hacking attack that it had ever experienced. Con artists hacked into the accounts of top politicians, celebrities, billionaires, and companies – including Barack Obama, Joe Biden, Bill Gates, Warren Buffett, Jeff Bezos, and Elon Musk – to solicit Bitcoin.
In after-hours trading, Netflix tumbled about 10% after the streaming video service reported slower subscriber growth than expected.
American Airlines dropped over 7% after sending about 25,000 notices of potential furloughs to employees and warning that demand for air travel is braking again.
In the commodities market, gold has declined 0.14% on fresh hopes for efficient coronavirus vaccines coming out from the US and UK. Also, the European Central Bank (ECB) hinted that it would probably leave interest rates unchanged for a while. Thus, the metal got stuck with some optimism that couldn’t be leveraged by the stock markets.
Elsewhere, crude oil prices are slightly declining on Friday morning, as investors are worried that the record surge in coronavirus cases in the US, along with the ongoing Sino-US tensions, could hurt global trade and hit demand for oil. Meanwhile, OPEC+ agreed earlier this week to ease production cuts.
WTI futures are down 0.22% to $40.66 while Brent futures have declined 0.25% to $43.22.
The US confirmed over 75,000 new COVID cases on Thursday, which is another record. Cases were increasing in 41 states, with 25 of them reporting growth in COVID deaths.
In FX, the US dollar has been somewhat bullish, as investors look for safe havens amid the spike in COVID cases. Markets also expect further stimulus from the US. While the EUR/USD is down 0.10%, the USD index has declined 0.08%, losing earlier gains.
The euro still eyes 1.1400 as the ECB left the policy unchanged on Thursday, in line with expectations. Previously, the central bank took unprecedented measures to support the biggest economic collapse in decades. The European currency has dropped slightly on comments that the ECB has slowed the pace of asset purchases under the Pandemic Emergency Purchase Programme (PEPP).
Finally, the British pound has increased against both the USD and euro, as the UK’s pace of decline in job losses has slowed down. Britain’s unemployment rate remained unchanged at 3.9%, while analysts expected an increase to 4.2%.
