• Asian shares slip as Beijing locks down after a new outbreak
• European shares open higher despite IMF growth warning
• Record fall in Japanese exports in May
• Dollar gains after record US retail sales see a rise
• British pound brushes off a bigger drop in UK May inflation.

Inspiration

“As much as possible, you don’t want to be well paid merely for taking big risks. Anyone can manage that. You want to be well-paid because you did your homework.” – Joel Greenblatt.

Opening Calls

S&P 500: 3,132 (+8 pts)

Dow Jones: 26,361 (+72 pts).

Shares

Asian shares gave back some of the prior day’s gain on Wednesday as issues specific to the region- including new coronavirus cases in Beijing and renewed tensions in Korea weighed. Futures point to a stronger open on Wall Street with investors taking heart from news that a cheap steroid drug can help save coronavirus patients in critical condition and hopes for a new $1 trillion package of infrastructure spending.

European markets are back in their winning ways, looking for back-to-back gains despite warnings from IMF Chief Economist Gita Gopinath that the June forecasts will show the IMF expects a bigger contraction than previously forecast. The optimism in the face of several headwinds stems from the Federal Reserve plans to buy individual corporate bonds. The Fed buying US corporate debt will naturally seep across into lower borrowing costs for European and other global companies.

Forex

The British pound brushed off a bigger than expected fall in UK retail, consumer and producer prices in May. The government-enforced lockdown in the UK has only started easing off since June. Any data from May is being dismissed as part of the downturn rather than the recovery. Equally, a record fall in Japanese exports that throws open the possibility of a slower recovery in had little impact on USD/JPY, which is tracking the moves in US yields.

The dollar had picked up momentum yesterday afternoon when monthly retail sales blew through expectations with a whopping +17.7% monthly increase. The gains weren’t enough to challenge the lows from last week in EUR/USD and GBP/USD, which were both firming as of Wednesday.

Commodities

Gold prices have been little changed after the late reversal higher on Monday. The price action over the past two days fits in with a broader picture of gold, taking a breather after a big up-move. Interestingly, a not dissimilar thing is happening in Bitcoin, which has been hovering under 10k for five weeks.

Kind Regards.