June 23, 2020
Asia-Pacific stocks rise as Peter Navarro says US-China trade deal still on track
Shares in the Asia-Pacific region were bullish on Tuesday, June 23, in the midst of a turbulent session, as White House advisor Peter Navarro caused a misunderstanding in an interview and had to rectify and clarify that the U.S.-China trade agreement is not over. Navarro said his comments had initially been interpreted out of context.
Navarro’s interview caused a strong backlash in the Asia session and futures recovered after the White House trade adviser had to rectify.
Mainland Chinese stocks had a bullish tone, with the Shanghai compound rising slightly. Hong Kong’s Hang Seng index rose by 0.97% at the end of the session. In Japan, the Nikkei 225 rose by 0.96%. South Korea’s Kospi was also up 0.46% and Australia’s ASX 200 was virtually unchanged.
US stocks rose on Monday, June 22, building on last week’s strong gains. Stocks of major technology companies led the positive market tone. Major indices briefly reduced some of their gains towards the end of the session, after Texas Governor Greg Abbott said that the coronavirus is spreading at an unacceptable rate.
Apple shares rose more than 2% and reached a record high after the company made a major announcement at its annual Global Developers Conference. The technology giant announced the latest version of iOS and also said that its new Mac computers from now on will no longer use Intel chips.
Microsoft went up more than 2% to lead the Dow. Amazon advanced 1.5%. Netflix was up 2.6%. Facebook made a slight gain. Retailers, which are directly linked to the economic reopening, were also among the best.
European stocks closed lower on Monday, June 22, as investors reacted to the rise in coronavirus cases. The pan-European Stoxx 600 ended down 0.7%, with almost all sectors in negative territory.
International investors are closely following the pandemic’s development, following news that cases are increasing rapidly. Germany’s Robert Koch Institute for Public Health said the coronavirus reproduction rate, which indicates how many people an infected person can infect on average, jumped to 2.88 on Sunday from 1.79 the day before. Experts have set out to keep the reproduction rate below one to contain the outbreak.
Oil showed little change during Tuesday’s Asian session. The price of West Texas is at $40.56 a barrel.
Gold fell in Tuesday’s Asian session on expectations of positive manufacturing data from the Euro-Zone. Economists expect the Eurozone composite PMI to rise to 42.4 in June from 31.9 last month as European economies gradually reopen.
However, concerns about the second wave of the pandemic are keeping the metal safe near its highest level in more than a month.
No one is currently questioning the issuance of common debt in Europe
Portuguese Prime Minister António Costa is optimistic about the political will shown at the summit of the European Union’s heads of state and government.
Costa has stated that the issue of common debt will be carried out, to create a fund that will allow economic recovery in Europe.
The European Commission’s proposal is best suited to the current situation and will allow each Member State to design its own recovery plan.
Although there was no agreement at this summit, and a second will be held in Brussels in mid-July in person, Costa assured that there has been a rapprochement between the positions of the member countries.
Cruise line operators’ shares dropped sharply
Shares declined after the International Association of Cruise Lines announced the suspension of cruise operations in U.S. ports.
The major cruise lines have agreed to voluntarily extend the suspension of operations until September 15.
Norwegian Cruise Line and Carnival each fell by more than 5%, while Royal Caribbean fell by 6.8%.
On the other hand, Arizona and Florida reported records in confirmed cases of Covid-19, while the states continue their reopenings in phases. California on Thursday reported more than 4,000 new cases in a single day, the highest daily number in history.
Negative news about the pandemic led to shares at their lowest level
Apple said it is closing eleven stores in Florida, Arizona, South Carolina and North Carolina again.
All the stores had been reopened since Apple initially closed them in March because of the coronavirus outbreak.
Shares in the technology giant traded 0.5% lower.
On the other hand, China suspended chicken imports from Tyson Foods’ plant in Springdale, Arkansas.
China made this decision because of coronavirus infections among workers at the plant.
Tyson Foods said it was investigating the issue, but added that it was confident its products were safe and hoped the problem would be resolved as soon as possible.
For years investors have been forced to change their approach to the market
They have gone from ‘value’ to reaction to intervened markets.
Investors must now react more to the liquidity policies and stimuli of the authorities than to any other market-related factor, some macro data or even corporate results.
Central bank support for the markets in recent years has been massive and in recent weeks has been exaggerated.
It is the authorities themselves who claim that their mission is not geared to monitoring the behaviour of the stock markets. However, every time the market hints at signs of weakness, some central bank appears to announce new developments in the form of stimuli and bailouts. What it does is offer much more money to reassure investors and promote price increases.
The crisis has forced central banks to inject much more liquidity than initially expected. The result is that an unprecedented monster has been engendered: a very complex financial bubble and a truly disturbing universe of zombie companies.
For the moment, the green listing screens lead one to believe that there is reality behind the price formation, when the real reason behind the increases is almost exclusively artificial.
The interventionist frenzy is such that there is a great disconnection between the real economy and the financial one, a distortion between quotations and company profits.
Politicians like Donald Trump, and others in general, follow the stock market and often imply that the strength of the stock market reflects their own management.
Politicians need stock price rises and bright green in everyone’s mind to face their election campaigns with a chance of success.