Market Update

The provided table illustrates a strong uptick in the majority of global equity markets this week.
However, beneath this apparent stability, there were turbulent intraday movements as markets reacted to the ongoing tug-of-war between signs of economic recovery and the persistent rise in coronavirus cases.
Despite the escalating uncertainties tied to the continuous spread of the virus in America, it's challenging to adopt a strongly negative stance towards equity markets due to the rapid resurgence in economic activities.
Wednesday's (July 1, 2020) rapid rise in the ISM manufacturing index, reaching a reading of 52.6 (with 50 marking the boundary between expansion and contraction), was particularly encouraging. This reading was not only a strong indicator of economic growth but also the most promising since April 2019, significantly boosting investor confidence. Moreover, the astounding June non-farm payroll data released on Thursday (July 2, 2020) provided substantial evidence of the ongoing economic recovery. The report revealed the addition of nearly 5 million jobs last month, especially in sectors severely impacted during the initial coronavirus outbreak, such as leisure and hospitality. This data not only supports the idea of an ongoing economic rebound but also suggests the underlying economic fundamentals are robust enough to foster a V-shaped recovery, characterized by a sharp and swift resurgence in economic activity.
In China, the momentum was sustained with the Caixin PMI services index reaching its highest level since April 2010. This boost contributed significantly to the strong rally in the CSI 300 index, which closed on Friday (July 3, 2020) at its highest level since June 2015, showcasing immense confidence in the Chinese economy.
Moreover, in the UK, Andy Haldane, the Chief Economist of the Bank of England, stated that the UK economy was rebounding at a faster and more robust pace than he initially anticipated. Consequently, the country appears to be on track for a V-shaped recovery.
Despite these positive signs, the immediate future remains uncertain, and we may continue to experience periods of progress followed by setbacks in the equity markets. This volatility is likely to persist until a coronavirus vaccine becomes available. However, it's crucial to note that numerous promising vaccine candidates are currently in development, suggesting that a solution is on the horizon. This optimism sets the stage for a strong 2021.
Looking ahead, this week's economic calendar is relatively quiet. The most noteworthy event will be the release of the weekly US jobless claims data on Thursday (July 9, 2020). Additionally, other data releases include UK new car registrations, US ISM Non-Manufacturing index, US mortgage applications, Eurozone retail sales, Chinese Consumer Price Index (CPI), and Japanese balance of payments.