Closing Report 05.08.2021

US and European markets are confident on Thursday

AMERICAN MARKETS MID DAY

The New York Stock Exchange advanced on Thursday morning after worse-than-expected unemployment figures pushed back the scenario of a forthcoming normalisation of the Fed’s policy. The main New York indices advanced by an average of 0.6%. The Federal Reserve may begin to reduce its accommodative monetary policy sooner than some expect as the U.S. economic recovery proceeds apace and the labor market improves, Fed Governor Christopher Waller said Thursday. « We will potentially be in a position to reduce accommodative monetary policy sooner than some expect, » he said. He said it is possible that the US labour market will have recovered about 85% of the jobs lost during the COVID-19 pandemic by September after accounting for the retirement of nearly 2 million people.

EUROPEAN MARKETS CLOSING

The European stock markets ended higher on Thursday, with the exception of London, supported by a certain optimism on the economy and a good results season. In Paris, the CAC 40 gained 0.52% to 6,781.19 points. The UK’s FTSE gave up 0.05%, hurt by a stronger pound and a decline in mining stocks, while Germany’s Dax gained 0.33%. The EuroStoxx 50 index advanced by 0.39%. The Stoxx 600 reached a record high for the fourth consecutive session, still supported by a good results season. In Frankfurt, Zalando (-4.83%), Bayer (-7.6%) and Adidas (-6.02%) also suffered after publishing their results.

ASIAN PACIFIC MARKETS CLOSING

In Asia, Hong Kong (-0.84%) and Shanghai (-0.31%) fell. Tokyo remained in the green (+0.52%), buoyed by corporate earnings. In China, the Delta variant and pressure on certain sectors weighed on the indices. An article published on Thursday in a Chinese state media estimated that the video game sector, which generates billions of yuan, should no longer benefit from « tax advantages ». This has weighed again on Chinese markets and caused the sector’s giant Tencent to fall by 3.9%, two days after the official press criticised the « addiction » to this leisure activity.

COMMODITIES & FOREX MARKETS

US natural gas stocks rose by 13 billion cubic feet (about 370 million cubic metres) in the week ending 30 July, according to the latest figures from the EIA, less than the 21 billion expected. The previous week, they had risen by 36 billion cubic feet. The high temperatures in North America have boosted demand as gas is used in power generation to run air conditioners. Continued high temperatures are expected to further boost prices.

The pound briefly strengthened against the dollar after the Bank of England announced that it would start to reduce its asset purchases when its rate reaches 0.5%. The central bank also raised its economic growth forecasts for 2022 and 2023, while maintaining its estimate for this year, with GDP at 7.25%.

2020 was the worst year in the history of the airline industry

The sector has a total loss of USD 126.4 billion. The statistics confirm that 2020 was the worst year on record, as the pandemic led to border closures, containment measures and brought much commercial aviation activity to a standstill. Last year, 1.8 billion passengers flew, a 60.2% drop from 2019, which saw 4.5 billion passengers. This drop in passenger numbers is « the largest on record », says IATA. As for the net losses, they amount to 126.4 billion dollars, or about 106 billion euros, demonstrating « the devastating effects » of Covid-19 for the sector. The Middle East suffered the biggest loss in terms of passenger traffic, with a drop of 71.5%, Europe came second (-69.7%), followed by Africa (-68.5%). China, on the other hand, has become « the largest domestic market », following a faster recovery in traffic. Of the top five airlines ranked by total scheduled passenger kilometres carried, three are American – American Airlines (1st place), Delta Airlines (3rd), United Airlines (4th) – and two are Chinese – China Southern Airlines (2nd), China Eeastern Airlines (5th).