Sentiment

Posted by: Paul Donovan

01 Jun 2020

Daily update

  • There are more sentiment opinion polls on manufacturing due today. Assuming someone can be found to answer, these polls ask whether things are better or worse than last month. So investors need to consider whether the early lifting of lockdowns in May made things better than April. If they did, a correctly answered poll would give a reading over 50 (but the polls are not answered correctly).
  • Korean exports showed strength in technology, but weakness in autos. This fits with likely patterns of demand in Europe and the US. Consumers (at least higher income consumers) have savings to spend, and that money will probably be spent on consumer goods like electronics. Japanese capital spending data was stronger than expected, and will probably mean GDP is revised higher.
  • US equity futures weakened in the wake of protests in several US cities over the weekend. The economic recovery has been dependent on reducing fear. If fear is generated by recent events, that will harm the recovery.
  • US-China relations remain in focus after US President Trump announced that special treatment for Hong Kong would be withdrawn. This was expected by investors. US-Hong Kong trade is not especially important. Investor focus is on what it says about the bigger trade tensions.

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