Morning Report

Morning Report – Wednesday 5th August

Main Headlines

A large explosion rocked the Lebanese capital of Beirut yesterday after a major fire broke out near the city’s port, killing at least 78 people and injuring 4,000. Lebanese Prime Minister Hassan Diab said that an estimated 2,750 tons of ammonium nitrate had been stored at a warehouse in Beirut for six years, according to a statement published on the Republic of Lebanon Presidency website.

Asian stocks traded mixed on Wednesday as investors mulled the progress of stimulus talks in Washington and reports of a plan to review the U.S.-China trade deal. The dollar declined versus peers. Shares pared losses in Japan and Australia. They rose in South Korea and Hong Kong, with more moderate gains in Shanghai. S&P 500 futures were little changed after the index wavered between losses and gains through Tuesday before closing modestly higher. Gold dipped after hitting a record high. Ten-year Treasury yields stayed near their lowest since March. China’s yuan strengthened to its highest level since March 11, amid hopes that tensions with the U.S. will stay in check before the two sides review their phase one trade deal later this month.


Sterling edged lower yesterday erasing earlier gains as the U.S. dollar moved briefly higher, while fears of a second wave of virus infections and a Bank of England policy meeting later this week capped the pound’s advance. The move lower reversed a trend earlier in the session where the pound had been advancing towards a five month high hit last week versus the dollar. The pound’s recovery has been surprising in the past few weeks. It registered its biggest monthly rise in more than a decade in July even though prospects of a breakthrough in Brexit negotiations with Europe before a December deadline remain elusive.


A hardening perception that the U.S. recovery is lagging Europe has hardened the euro, which has repelled a rebound in the dollar and is not far from two year highs. The common currency also posted its best month in almost 10 years in July. The next economic updates are due later today with expectations of steady services growth in Europe.


The dollar fell in Asia overnight, hitting a five month low on the yuan, as the latest coronavirus relief package stalled in Congress and U.S. yields sank on the prospect that further monetary easing might be needed to support the economy. Speculation that stalemate over fiscal policy in Washington could leave the Federal Reserve with more to do, has hastened a steady decline in U.S. yields – undermining the dollar more broadly.

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

8:15 a.m.: Spain July services PMI
8:30 a.m.: Sweden 2Q GDP
8:45 a.m.: Italy July services PMI
8:50 a.m.: France July services PMI
8:55 a.m.: Germany July services PMI
9:00 a.m.: Euro-area July services PMI
9:30 a.m.: U.K. July services PMI
10:00 a.m.: Euro-area June retail sales
5:00 p.m.: Russia inflation