Stocks lower ahead of chancellor’s summer statement
|The mood in the market remains depressed on Wednesday as coronavirus concerns coupled with geopolitical tensions drag on risk sentiment. Equities across the board are out of favour whilst safe haven gold is consolidating just shy of $1800 after jumping 1% so far this week and hitting $1797, its highest level since 2012.
New daily US coronavirus cases dipped slightly at the start of the week. However, Tuesday's figures have shown its premature to say that numbers are falling. COVID-19 concerns were further fuelled by warnings from several Federal Reserve officials that rising coronavirus numbers in the US could jeopardize the economic recovery. The timing here of the rising numbers in the sunbelt is extremely important given that some stimulus programmes are due to expire soon.
US considers sanctions on Hong Kong and HSBC
Geopolitical tensions are also back in focus amid reports that the White House is toying with the idea of striking against the Hong Kong Dollar peg in retaliation for China's national security law. Whilst the Hong Kong Dollar has shrugged off the reports, HSBC is under pressure as the Trump administration also considers sanctions against banks in the city.
HSBC is caught in a political tug of war between the US and China. Asia is the biggest regional contributor to HSBC income highlighting the importance of the region to the business. However, sanctions from the US would be extremely damaging. The share price in London is still down 40% year to date, reflecting the troubles at the bank, compared to Barclays, for example which trades -26% lower year to date.
Rishi Sunak's Summer Statement In Focus
The Chancellor Rishi Sunak is set to take centre stage as he delivers his Summer statement, outlining the economic stimulus package which he will implement to steer the UK economy through the coronavirus crisis. The focus is set to be on jobs, both the protection and creation of jobs as he attempts to pull the UK economy out of the deepest economic downturn in 300 years.
In addition to jobs focus on business costs would be beneficial with immediate effect. More business rate relief, the pre-announced stamp duty holiday and targeted VAT cuts, particularly for the leisure and hospitality sectors would be well received. These measures could see house builders and leisure and hospitality stocks rally, whilst business rate cuts could see battered retail sector rise.
Should Rishi Sunak underwhelm, stocks, particularly on the FTSE250 could come under pressure among with the Pound.
FTSE 100 Chart
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.