SHANGHAI, May 28 (SMM) – This is a roundup of global macroeconomic news last night and what is expected in the day ahead.
The US dollar edged lower against a basket of currencies on Wednesday, while US stocks rose on hopes of a quick rebound from the economic hit from the coronavirus pandemic, but rising tensions between Washington and Beijing kept market optimism in check.
The US was reportedly considering sanctions on Chinese firms and officials over the situation in Hong Kong. Secretary of State Mike Pompeo said he had certified that Hong Kong no longer warrants special treatment under US law as it did when it was under British rule, a blow to its status as a major financial hub.
Huawei’s chief financial officer Meng Wanzhou lost a major legal battle in her fight against extradition to the US to stand trial on fraud charges.
In the Wednesday ruling, the Supreme Court of British Columbia found that the case against Meng meets a standard called “double criminality,” where the acts the US has accused her of are also illegal in Canada. The next phase of proceedings will begin next month.
The unveiling of a huge coronavirus recovery package from the EU, meanwhile, bolstered the euro and European stocks.
The European Commission unveiled a 750 billion euro ($825.23 billion) plan on Wednesday to prop up economies hammered by the coronavirus crisis, hoping to end months of squabbling over how to fund a recovery that has exposed faultlines across the 27-nation bloc.
The euro zone economy will probably shrink between 8% and 12% this year, European Central Bank President Christine Lagarde said, warning a the outcome would be between medium and severe.
Concerns over US-China tensions, coupled with doubts over Russia’s commitment to deep production cuts, dominated the oil market on Wednesday, and oil prices tumbled.
Russian President Vladimir Putin and Saudi Arabia’s Mohammed bin Salman on Wednesday reiterated their cooperation on the agreement ahead of a June 9-10 meeting.
The industry-funded American Petroleum Institute (API) reported that US crude stockpiles rose 8.73 million barrels for the week ending May 22. Gasoline supplies also gained 1.12 million barrels, according to the report.
The US Energy Information Administration (EIA) will release its weekly crude inventory data Thursday.
LME nonferrous metals, except for aluminium, closed lower on Wednesday, with zinc shedding 2.4% to lead the way down. Lead dropped 1.9%, nickel declined 1.7%, copper slipped 1.4% and tin dipped 0.1%.
SHFE nonferrous metals performed similarly on Wednesday night. Lead and zinc fell close to 0.7%, nickel and copper shed about 0.6%, tin sank nearly 0.3%, while aluminium rose 0.9%.
In China, profits at major industrial firms continued to fall in the first four months of 2020, but the decline was seen to narrow amid government efforts to coordinate COVID-19 containment and economic growth, data showed Wednesday.
Profits of industrial companies with annual revenue of more than 20 million yuan (about $2.8 million) totaled 1.26 trillion yuan during the January-April period, down 27.4% year on year, according to the National Bureau of Statistics (NBS). The contraction narrowed from the 36.7% decline in the first quarter, NBS data showed.
In April alone, industrial profits edged down 4.3%, recovering from the 34.9% drop registered in March as production and sales rebounded on nationwide restoration of economic activities, NBS statistician Zhu Hong noted.
The US Department of Labor is scheduled to release the latest update to initial jobless claims at 8:30 am ET Thursday morning. Though economists polled by Dow Jones expect the government to announce yet another deceleration in the pace of claims, the consensus estimate predicts another 2.05 million Americans filed for insurance during the week ended May 23.
US first-quarter gross domestic product (GDP), consumer spending and core personal consumption expenditures (PCE) price index, April durable goods orders, eurozone’s May consumer sentiment index and Germany’s May consumer price index (CPI) are also slated for release Thursday.