European and US share indices finished an indecisive overnight session in the green despite rising Covid-19 infection rates and a worse than expected US jobless claims report. The US Federal Reserve once again came to investors’ rescue, easing bank capital requirements while capping dividends and banning share buybacks.
Other asset classes were less convinced. Currencies traded in narrow ranges as the US dollar edged higher. Haven markets held at higher levels, with gold sticking at its 7-year high and bonds bid. Crude oil and iron ore rose, but base metals came under modest pressure.
The third read on US national accounts confirmed a 5% contraction in production and a 6.8% fall in personal consumption in the first quarter. Durable goods orders for May were better than forecast, but the 1.48 million initial jobless claims were more than 10% worse than expected. Inflation, as measured by the core PCE deflator, is expected to flat-line tonight
Japanese inflation remains benign, as the June read this morning matched estimates at 0.3% year on year. Singapore’s industrial production data is expected to show a fall of 5.6% in May when released later this morning. It’s difficult to predict market reactions as it appears the Fed is the only game in town right now.
Futures markets indicate an opening surge in Japan and Australia. However the Hang Seng may fall as traders return from yesterday’s holiday. China mainland markets remain closed.