Market movers today
Today’s highlight is the German IFO numbers. We expect them to give a similar message as yesterday’s PMI: recovery strengthening, but not fully back to normal.
In Scandi, Swedish consumer confidence and manufacturing confidence is due for release. We also get Norwegian unemployment statistics.
Today, IMF will publish its ‘World Economic Outlook’. We expect the IMF to lower its global growth outlook compared with its April forecast. This will mainly be driven by a more downbeat view on emerging markets, but even the euro area and the US may see lower growth estimates despite the opening up of economies as the downturn in H1 may be deeper than expected.
The spreading of COVID-19 in particular in US states continues to be watched with concern but the market impact remains somewhat muted.
Selected market news
Activity indicators in Europe and US (PMIs) edged higher yesterday. Over recent week(s), we have seen markets stalling their upwards momentum but the data confirms we are indeed seeing improving activity levels. Estimates of this data were highly bimodal in favour of still shallow activity or a strong uptick. Thus, seeing we indeed are moving towards improvement was well received. In turn, industrials, autos, banks and high-risk currencies such as EUR/USD, Brazil’s real and Scandies strengthened quite a bit yesterday.
Danish spending data up to and including 22 June confirms that card and MobilePay spending has stabilised at normal levels. The reduction in cash usage implies that spending is still slightly below what we usually see and with spending on cars down as well, we estimate total consumption to still be below normal. Overall spending continues to return to normal, with the travel industry being the main exception. We are also yet to see spending at levels that compensate for the income lost during the lockdown months. See more in Spending Monitor: Card spending has stabilised at normal levels, but not improved further, 23 June.
After falling to an all-time low of 13.6 in April, euro area composite PMI rose to 47.5 in June. The underlining details paint a picture of gradual improvement in demand. Overall, the June PMIs point to a strengthening of the recovery signal at the end of Q2 and underpin the message we already got from some high frequency data. Especially the increases in service point to a renewed eagerness by consumers to spend after restrictions were lifted, which bodes well for H2 20.
US virus data keeps worsening. Another 2-3 weeks of this development and pressure on hospitals could become significant. The risk of renewed restrictions is increasing but given the opposition against such restrictions, the situation likely needs to deteriorate quite a bit further before such is put on the table.
