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A look at the day ahead from EMEA deputy markets editor Sujata
Rao. The views expressed are her own.
June flash PMI readings are providing markets with
something to cheer about. After robust improvements in Australia
and Japan, the French flash PMI showed business activity
unexpectedly rebounded into growth after three months of
downturn. It broke through the magic 50 level that divides
expansion from contraction. Compare that with 32 in May and 11.1
in April and you know why the euro has risen 0.3% against the
dollar -- it was flat earlier.
Earlier, Australia's composite PMI was also above 50, almost
doubling from last month. Japan's composite was at 38, but
that's still up 10 points from the May reading. There are
expectations of similar rises across the euro zone and the
United States, perhaps less so in the UK.
So barring more lockdowns, economies may well be on the road
to recovery. Euro area consumer confidence yesterday showed
continued improvement as did U.S. indicators such as the Chicago
Fed index.
As for the coronavirus, it may have sickened over 9 million
people worldwide, and 12 U.S. states are seeing record infection
rates, but stock markets are again roaring higher and the dollar
looks set to extend its losses after yesterday's tumble -- the
biggest one-day fall since early April. European shares are up
1.1%, picking up speed after the PMIs. MSCI's world index has
risen almost half a percent.
Earlier today, though, markets were whipsawed by White House
adviser Peter Navarro, who initially said the trade deal with
China was over, only to walk back those comments soon after.
Treasury Secretary Steven Mnuchin echoed President Donald
Trump's recent threat about "decoupling" from China.
They sent the yuan reeling to one-week lows, lowered
mainland shares 0.5% and caused a selloff in trade-oriented
currencies such as the Aussie. All's well that ends well,
however – once Navarro backtracked and Trump too denied the deal
had collapsed, U.S. equity futures, down as much as 1.6%,
recovered into the black.
Asian and emerging-market equities were also trading
stronger after the earlier scare.
In European corporate news: Many FTSE 250 companies,
particularly in travel and leisure, are likely to see gains as
PM Boris Johnson is expected to announce cinemas, museums and
galleries in England will re-open from July 4.
French drugmaker Sanofi said it expected to get approval by
the first half of 2021 for a potential COVID-19 vaccine it was
developing with Britain's GlaxoSmithKline.
Boehringer Ingelheim is selling most of its nearly one
billion-pound stake in Hikma. Cosmo Pharmaceuticals
announced regulatory approval of Gi Genius in Israel.
German metals trader Kloeckner rose 13.4% after the company
gave its second-quarter outlook.
Germany’s Bayer scored a victory in its ongoing
litigation over its glyphosate-based weed killer Roundup. A U.S.
federal appeals court blocked California from requiring that the
product carry a cancer warning.
European Union antitrust regulators warned about the
possible anti-competitive effects of the LSE’s $27 billion
takeover of Refinitiv and opened a four-month investigation into
the deal.
Finally, watch out for more acquisition mania around the
world. Hedge fund investor Steve Ackman is the latest to be
raising a "blank-check" vehicle -- a $3 billion special-purpose
fund that will give him firepower to compete for big
acquisitions against private equity firms.
