TODAY ON WALL STREET: Is the US stimulus package about to be unveiled?

08/03/2020 | 09:01am

To start the week, markets are slightly up, as investors are cautiously optimistic that a coronavirus relief deal will be agreed. Democrats and Republicans still cannot agree on the US stimulus package, depriving more than 25 million Americans of the weekly aid they had been receiving until now.

Steven Mnuchin nevertheless expressed optimism yesterday about the new round of negotiations that will begin today.

U.S. technology stocks continue to defy the crisis and provide the markets with fuel to support prices. Apple, Amazon.com and Facebook finished the last session of July with a bang, after publishing results that almost definitely put them in the category of economic safe haven. Incidentally, Apple's capitalization increased by $168 billion in Friday's session alone.

Meanwhile, tensions between Beijing and Washington are escalating. The latest issue to date is TikTok, whose U.S. assets could be sold to Microsoft to avoid an outright ban. The White House accuses the app of being a tool of Chinese intelligence.

On the economic front, fresh data shows a decline in household incomes in June (published Friday), down 1.1% MoM, after their 4.4% drop in May.

Markit's final manufacturing PMIs for July are released today. There were many increases, notably Spain, Italy and Germany, which now exceed 50, at 53.5, 51.9 and 51, respectively. The French index reached 52.4, stable compared to June. Japan stands at 45.2 (against 40.1) and Korea at 46.9, against 43.4. On the other hand, in India and Russia, the situation seems to have deteriorated. Their indices are 46 and 48.4, compared with 47.2 and 49.4.

In the U.S., they will come later today and will be supported by the ISM and Construction Spending. This morning the Chinese Manufacturing PMI is announced at 52.8 points, more dynamic than expected, while the contraction of Japanese GDP in Q2 is slightly less pronounced than expected.

 

 

Romain Fournier
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