Morning Report – Tuesday 21st July

Main Headlines

EU leaders agreed on a landmark stimulus package that will see the bloc issue €750 billion of joint debt to help member states mitigate the economic downturn. The emergency fund will dole out €390 billion of grants and €360 billion euros of low interest loans. Italy will likely be the biggest recipient with about €82 billion in grants and about €127 billion in loans. “Never before did the EU invest in the future like this,” Belgian PM Sophie Wilmes said.

European stock futures rallied on the stimulus deal, but the moves in tech continues to be the story, spurring gains across Asia’s markets and Nasdaq futures. Firms with ties to Ant Group jumped after the company announced plans for a simultaneous IPO in Hong Kong and Shanghai. Treasuries, oil and gold were little changed. Base metals rose.

The Nasdaq 100 gained almost 3%, its best day versus the S&P 500 since April. The rally pushed it further away from its recent support line. Trading 21% above its average price over the past 100 days, the gap is the widest since the dot com peak in March 2000.

GBP

The pound made gains overnight but investors remain bearish as Britain’s bleak economic outlook and Brexit risks weighed on the currency. The speculative market’s net short position on the pound got smaller from a second week in a row in the week to July 14, according to CFTC futures data. But the market is still as bearish on the pound as it was in December 2019.

EUR

The euro marked a fresh four month high and commodity currencies found support on overnight after European countries agreed on a rescue package for the bloc’s coronavirus hit economies. The complexly negotiated agreement – a compromise on concerns that northern states had about handouts for more profligate neighbours – was hailed as an important signal of unity by Europe’s leaders and as a foundation for recovery.

USD

Against a basket of currencies the dollar made a four month low and remained under pressure as hopes for a COVID-19 vaccine and improved global sentiment reduced demand for the greenback.

Main Economic Data/Central Banks/Government (All Times BST)

6:00 a.m.: Finland June unemployment
7:00 a.m.: U.K. public sector net borrowing
9:30 a.m.: Hong Kong CPI
1:00 p.m.: Hungary rate decision
2:30 p.m.: ECB’s Guindos, Greece’s Stouranas in panel discussion

Corporate Events

Earning include Novartis, Coca-Cola, Lockheed Martin, Philip Morris International, TD Ameritrade, Canadian National Railway, Texas Instruments, Capital One, Snap, Navient, United Airlines