“Decrease in Asian Consumer Spending…”

China’s consumer spending has been dragging down for a while in its economic recovery from the pandemic, the same results can be seen in the retail sales in other parts of Asia. China, was the country very well known for being one of the first to be impacted by COVID-19 but also the first to recover from the pandemic, has been successful in controlling waves of coronavirus. But the country has still been held back its economic recovery due to slack retail spending despite the government’s efforts.

When one compares developed countries in the West with most Asian nations, populations have been receiving vaccines at a very slow pace and the main reason to this is lack of excess to vaccinations. As of the 1^st of July, only 12.65% of Japan’s population has been fully vaccinated. In Southeast Asia, countries like Indonesia and the Philippines have only 5% or less of their population fully vaccinated. Singapore has one of the highest rates of fully vaccinated population in Asia with 37% as of the 4^th of July. On the other hand, both the US and UK has already fully vaccinated more than 40% of their population.

China’s Monetary Policy Easing

On Wednesday, the Chinese Central Bank announced that it would stimulate the economy by decreasing the amount of funds banks need to hold in reserve. Next week we will expect last month’s economic data and the second-quarter Gross Domestic Product, figures which will gives us a better understanding of the country’s economy. Last year, China managed to quickly keep under control the domestic outbreak and was the only major economy to grow last year. But the persistent spread of disease overseas and a surge in commodity prices have added uncertainties.

China’s Tech Stocks

The government of China has decided to attack the country’s technology giants by targeting their collection and use of data. On Monday, the Cyberspace Administration of China (CAC) also opened a cybersecurity probe into US listed Boss Zhipin and subsidiaries of Full Truck Alliance. This came a day after the CAC instructed app stores in the country to remove the taxi service Didi, as it was accused that the company had an illegal collection and use of personal data. The CAC is body which reports to a board having Xi Jinping, the Chinese President, as one of the board members. This is not the first time that China has gone after its domestic technology giants in these last couple of months, from the cancellation of Ant Group’s $34.5 billion listing to Alibaba’s $2.8 billion antitrust fine. All this crackdown is to target anti-monopoly and financial technology regulation. Regulators are concerned about data collection because of its importance to the technology, in other words data is the key driver of economic growth.

Oil Touches 6-year High

The commodity’s price had the biggest increase in the past six years as a result of the talks between OPEC and its oil-producing allies were postponed indefinitely, the group failed to reach an agreement on production policy for August onwards. On Tuesday, West Texas Intermediate crude futures was as high as $76.98. these gains faded and the contract for August delivery fell 2.38% to $73.37 per barrel.

Discussions between OPEC+ began last week to agree on the output policy for the rest of 2021. On Friday of last week, the group voted on an agreement which would have resulted in 400,000 barrels per day to the market each month from August till the end of the year. The United Arab Emirates rejected this agreement regardless of the group’s efforts to try to reach a consensus.

Market Update

On Tuesday, stocks fell as Wall Street opened again after a short Independence Day weekend, with concerns that maybe the best of the economic recovery from the crisis is behind us. The Dow Jones Industrial Average dipped 208.98 points to 34,577.37, due to losses in Dow Inc., Caterpillar, JPMorgan and Chevron. The S&P 500 fell 0.2% to 4,343.54 right after reaching a record high at open bell. The Nasdaq Composite increase by 0.17% to 14,663.64.

On Wednesday, investor sentiment changed as there was an increase in investments in mega-cap technology stocks which resulted the S&P 500 to reach a new record. An increase of 0.34% to result to an all-time high of 4,358.13 following a seven-day winning streak in the previous session. The Dow Jones Industrial Average gained 104.42 points to 34,681.79. The Nasdaq Composite closed flat at 14,665.06.

Major US stock indices fell on Thursday due to concerns regarding the global economic comeback from COVID. The losses where a result of Japan declaring a state of emergency in Tokyo due to the upcoming Olympics whiles other countries deal with rebound in cases due to variants. The Dow Jones Industrial Average fell 0.75% to 34,421.93. The S&P 500 dropped 0.86% to close at 4,320.82. The Nasdaq Composite decreased 0.72% to 14,559.78. Both the S&P 500 and the Nasdaq Composite closed at records in the previous session due to tech shares gains.

The latest jobless claims data were unexpectedly higher at 373,000, which are an indication of a possible slowdown in the labour picture due to the COVID recovery. Losses were mainly a result of companies which would benefit from rapid economic comeback from the virus. Shares of Royal Caribbean, Carnival, and Norwegian Cruise Line each fell more than 1%, same applies to Delta Air Lines and United Airlines.

The 10-year US Treasury yield fell as low as 1.25% on Thursday. This is the lowest point since February 2021, a continued sharp reversal in the bond market in the middle of growing concerns about the pace of the global economic recovery. The yield of the 30-year US Treasury yield fell by 2.5 basis points to reach 1.919%.

In early Friday morning trading, stock futures were higher after Thursday’s decrease. Futures on the Dow Jones Industrial Average rose 117 points. S&P 500 futures and Nasdaq-100 futures both traded in positive territory. The Dow closed Thursday’s regular session 0.75%, lower. The S&P 500 dipped 0.86% while the Nasdaq broke a four-day win streak by falling 0.72%. All three major averages are on track to close lower for the week.

Currency Roundup

In early European trading on Friday, the Dollar pushed higher with the safe haven benefiting from investors becoming risk averse due to the global economic recovery as COVID-19 cases started to increase once again. The Dollar Index, which measure against a collection of six other currencies, traded 0.1% higher at 92.505, slightly lower than Wednesday’s three-month high of 92.844. USD/JPY was up 0.3% at 110.06, EUR/USD fell 0.1% to 1.1827, while the risk-sensitive AUD/USD fell 0.1% to 0.7419, adding to Thursday’s 0.7% decline and just above the fresh low for the year at 0.7410

The Japanese Yen weakened on Friday as a result to US Treasury yields decreased, but it was on track for the highest weekly gain since November 2020. While the perceived safe-haven currencies including the Yen and the Franc weakened by 0.3% against the dollar in early London trading, the Yen was on track to strengthen 0.9% this week, its biggest weekly rise since early November 2020.

ECB Inflation Target

On Thursday, the European Central Bank went through a major policy review to revise its inflation target and to allow consumer prices to overshoot when deemed necessary. In January 2020, decided to start reviewing policies from 2003. This new project had to be postponed due to a more urgent matter that is the pandemic. The focus of this review was how the adaption of the ECB’s policies and tools help to achieve the main goal of price stability. “The Governing Council considers that price stability is best maintained by aiming for a 2% inflation target over the medium term. This target is symmetric, meaning negative and positive deviations of inflation from the target are equally undesirable,” the ECB said in a statement. ECB President Christine Lagarde said “We know that 2% is not going to be constantly on target, there might be some moderate, temporary deviation in either direction of that 2% and that is okay. What we are very concerned about is any sustainable, durable, significant deviation from the target and that will require forceful action.” The first regular monetary policy meeting of the Governing Council applying this new strategy will be held on the 22^nd of July 2021. Lagarde also said there would be a new policy review in 2025.

European Shares

The pan-European Stoxx 600 interim closed down 1.8%, having retailers fall by 3.2% and lead losses as all sectors and major Stock Exchanges drop to deep negative territory. This European plunge had a negative sentiment in both Asia and US. Asian shares mostly declined Thursday, as Chinese tech stocks in Hong Kong came under pressure after regulatory fears resurfaced. Meanwhile, on Wall Street, the major U.S. stock indexes fell on worries about the global recovery.

UK’s Economic Rebound Slowed in May

Britain had unexpectedly post-lockdown economic rebound sharp slowdown in May even though there were further relaxation of social-distancing rules, as reported by official data which also indicated the hit to carmakers from a global shortage of microchips. Gross Domestic Product expanded 0.8% by a monthly, which is much faster than its typical pre-pandemic pace but lower from April’s 2% increase. The UK was one of the most countries which had the biggest hits from the pandemic among advanced economies in 2020 and GDP in May was 3.1% below its level in February 2020, the last full month before the country first went into lockdown. Sterling fell slightly after the figures were published. The expectations of the Bank of England for Britain’s economic growth were of 7.25% this year, the fastest annual growth since 1941 when Britain was rearming during World War II. Last year output plunged by almost 10%, the biggest drop in more than 300 years.

Malta’s Registered Unemployment for May 2021

Data provided by Jobsplus for May 2021 indicate a year-on-year decrease of 2,193 persons registering under Part I, and an additional drop of 215 persons registering under Part II of the unemployment register. Registered unemployment levels decreased across all age groups. A considerably decrease was noted in those registering for work for a duration of less than 21 weeks, when compared to the same month in 2020. On the other hand, those persons registering for work between 21 and 52 weeks recorded the largest increase, followed by those registering for more than one year. The number of persons with a disability who were registering for work decreased by 3 when compared to the previous year, reaching 260 persons. Males accounted for 71.9% of total registrants with a disability. The largest share of males and females on the unemployment register sought occupations as Clerical support workers, with 22.8% and 41.7% respectively.

Malta’s Index of Industrial Production for May 2021

After adjusting for seasonal effects and the working-day pattern, the index of industrial production registered a decrease of 4.0% between April and May 2021. Decreases were registered in the production of capital goods (4.9%), consumer goods (4.3%) and energy (4.2%). On the other hand, the production of intermediate goods increased by 0.7%. In May 2021, total industrial production increased by 7.6% on an annual basis after adjusting for the working-day pattern. All the main industrial groupings saw production increases. The highest increase was registered in the production of capital goods (23.3%) followed by the production of energy (7.1%), intermediate goods (5.2%) and consumer goods (3.4%)

World Population Day – 11^th of July 2021

The increase in the total resident population recorded for Malta and Gozo in 2020, was the lowest since 2010. When considering natural increase and net migration, the population only grew by 1,536 persons, compared to 21,005 in 2019. This slowdown in population growth mirrors the trend exhibited in 2020 across the European Union (EU) – a clear indication of the impact of the COVID-19 pandemic on demographic shifts within the member states. In 2020, the total population of the EU (excluding the United Kingdom) shrunk by 0.1% or approximately 312,000 persons. Despite this, most of the EU member states did not experience a shrinkage in their population, with only eight of the 27 countries showing a negative balance compared to 2019. Of these countries, six already experienced a negative balance in the previous year. Luxembourg recorded the highest growth at 1.4%, while Latvia experienced the greatest population shrinkage at -0.8%. Malta, on the other hand, was the member state with the largest decline in annual growth when compared to the previous year.

‘Disclaimer: The information provided on this website is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning investments or investment decisions, or tax or legal advice. Similarly, any views or options expressed on this website are not intended and should not be construed as being investment, tax or legal advice or recommendations. Investment advice should always be based on the circumstances of the person to whom it is directed, which circumstances have not been taken into consideration by the persons expressing the views or opinions appearing on this website. Timberland Finance has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website. You should always take professional investment advice in connection with, or independently research and verify, any information that you find or views or opinions which you read on our website and wish to rely upon, whether for the purpose of making an investment decision or otherwise. Timberland Finance does not accept liability for losses suffered by persons as a result of information, views of opinions appearing on this website. This website is owned and operated by Timberland Invest Ltd.’