US mortgage applications 2.7% higher

Posted on May 28, 2020June 15, 2020 by Exclusive Capital Research Team

The mortgage applications in the US for the week ending May 22, 2020, appreciated 2.7% compared to the previous week, the Mortgage Bankers Association stated in their Weekly Mortgage Applications Survey.

The Market Composite Index rose 2.7% on a seasonal basis and 3% on an unadjusted level.

The Refinance Index, compared to last week, decreased by 0.2% and was 176% upper completed to the same week but one year ago.

The seasonally adjusted Purchase Index rose 9% compared to the week earlier, and the unadjusted one appreciated 7% compared to the prior week and 9% higher than the same week a year ago.

Following the reopening of various states in the US, the housing market resumes its recovery path, as more buyers continue searching for a home.

Last week, the purchase applications climbed 9%, recording a sixth consecutive weekly appreciation and a rise of 54% since the beginning of April.

According to the MBA’s Associate Vice President of Economic and Industry Forecasting, Joel Kan, the purchase loan amount reached its highest zone since the middle of March.

The refinance activity resumes flat, but 176% higher compared to last year’s rate. Conventional refinance applications rose 2% while government refinancing dropped by almost 7%.

The refinance share of mortgage activity declined from 64.3% to 62.6%, and the adjustable-rate mortgage share of activity climbed to 3.4%.

The FHA share of total applications declined from 11.5%, the prior week, to 11.2%. The USDA share of total applications dropped from 0.7% to 0.6%, and the VA share fell from 11.5% to 11.2%.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $510,400 or less climbed from 3.41% to 3.42%, and for $510,400 or more from 3.66% to 3.71%, whereas the mortgages backed by the FHA declined from 3.46% to 3.41%.

The average contract interest rate for 15-year fixed-rate mortgages dropped from 2.88% to 2.87%, and the average contract interest rate for 5/1 ARMs declined from 3.19% to 3.08%.

Morning Briefing: US equities rally despite rising trade tensions

Posted on May 28, 2020July 3, 2020 by Vrasidas Neofytou

Global financial markets continued their uptrend momentum by adding gains on hopes for global economic recovery as more countries reopen their social and economic activities. The US stock indices hit fresh monthly highs, erasing almost all the pandemic-related losses, despite the escalation in US-China tensions over Hong Kong’s status.

Coronavirus Update:

Global cases: More than 5.62 million
Global deaths: At least 353,000
U.S. cases: More than 1.68 million
U.S. deaths: More than 100,000

Market Reaction:

US markets rose by 2% on Wednesday on optimism about the reopening of the US economy, overshadowing concerns over U.S.-China tensions. The Dow Jones index settled at 25.548, up 2.2%, its highest level since March, while S&P 500 and Nasdaq indices closed higher by 1.5% and 0.8% respectively.

The banking, retail and airline sectors which will benefit the most under market reopening, led the gains yesterday. However, stocks that outperformed as stay-at-home orders went into effect in March have lagged in recent sessions, such as Zoom, Amazon and Netflix.

Asian markets were higher this morning, following the overnight gains on Wall Street. Nikkei and Kospi indices led the gains with 2%, while Hang Seng fell 1% on rising tensions. The U.S. has declared that Hong Kong is no longer autonomous following China’s move to impose a national security law in the city, raising fears that U.S. sanctions on Beijing may soon follow.

Crude oil:

Crude oil prices fell 4% on Wednesday, for a second consecutive session, as growing tensions in Hong Kong raised concerns over energy demand. In addition, oil prices extended overnight losses after a report from API showed a surprised build-up in crude stockpiles by 8.7 million barrels in the week to May 22, compared with analysts’ expectations for a draw of 1.9 million barrels. The oil traders will be looking to see if data from the U.S. Energy Information Administration later on Thursday matches API.

WTI crude price settled at $31.37, down by 4.4%, while Brent crude finished the day at $33.64, or down 3.2%. Both contracts have lost almost 10% since hitting their 2-month highs on Tuesday.

Precious Metals:

Gold prices rose 0.5% at $1.720/oz on Thursday, gaining support from the weaker US dollar, EU stimulus plan and the rising tensions between the US and China over a Hong Kong security law. Silver price trades near $17.30/oz while Palladium broke below the key support level of $2.000/oz.

Forex Market:

Euro currency broke above the 1.10 level against the US dollar, ahead of the European Union (EU) Summit aimed to unveil a post-COVID-19 recovery plan of 750 billion euro, to help the Eurozone region recover from the pandemic. EUR/USD pair hits 2-months high at 1.102 supported also from the weaker US dollar amid trade tensions.

The DXY-dollar index extended its down trend momentum, breaking below the 99 level amid the Sino-American tensions around Hong Kong status.

Economic Calendar for May 28, 2020 (GMT+ 3:00):

Morning Briefing: Global markets advance on economic reopening

Posted on May 27, 2020July 3, 2020 by Vrasidas Neofytou

Global financial markets moved higher on Tuesday, extending their recent strong gains, supported from the optimism about the reopening of the global economy and a potential coronavirus vaccine. However, the market rally was capped after reports circulated that the US government is weighing sanctions on Chinese firms and officials over the situation in Hong Kong.

Coronavirus Update:

Global cases: More than 5.58 million
Global deaths: At least 350,423
U.S. cases: More than 1.68 million
U.S. deaths: At least 98,902

Market Reaction:

US markets continued their uptrend momentum by hitting fresh 2-months highs on Tuesday’s trading session driven by risk appetite. Dow Jones index surged 2.2% to close at the 25.000 level for the first time since early March, while the S&P 500 and Nasdaq followed with 1.2% and 0.2% in gains, respectively.

Asian markets traded mixed on Wednesday morning on fears for US sanctions on China and the re-opening optimism. Nikkei and Kospi indices led the gains with 0.5% while Hang Seng and CSI300 indices fell 0.5% on US-China tensions.

Crude oil:

Crude oil prices rose 2% on Tuesday, supported by growing confidence that OPEC members and allies are following through on commitments to cut supplies. Russian oil production volumes were near the country’s quota of 8.5 million bpd for May and June.

WTI crude price rose near $35 per barrel, the highest since March, while Brent crude broke above the $36 level. The fuel demand is recovering faster than expected as more countries re-open their economies and as more people start using their cars.

Oil prices received support yesterday after Russia’s Energy Ministry Alexander Novak said a rise in fuel demand should help to cut a global surplus of about 7 million to 12 million bpd by June or July.

Precious Metals:

Gold price fell 1% yesterday as investors moved away from safe-haven assets into growth instruments such as equities on improved risk sentiment. The price of the yellow metal hit weekly lows of $1.705/oz, followed by 1% losses in Silver and Palladium.

Forex Market:

The DXY- US dollar’s index, which measures the greenback’s strength against six other major currencies, fell 0.8% yesterday, breaking below the 99 level, its weakest since May 1st. However, the index rose to 99.20 this morning receiving some support from the escalation of trade tensions over Hong Kong’s status.

Australian and New Zealand dollars extended their recent gains against the US dollar, by hitting fresh highs of $0.667 and $0.623, respectively. EUR/USD pair rose near the 1.10 key resistance level while GBP/USD also climbed above 1.23.

Economic Calendar for May 27, 2020 (GMT+ 3:00):

Morning Briefing: Global markets higher on improved risk appetite

Posted on May 26, 2020July 3, 2020 by Vrasidas Neofytou

Global financial markets extend gains on improved risk sentiment after an American biotech company Novavax said that it started the first human study of its experimental virus vaccine. Furthermore, markets have been getting support from the re-start of the global economic activity and from the new stimulus plans from China, despite the tensions in Hong Kong.

Coronavirus Update:

Global cases: More than 5.4 million
Global deaths: More than 346,200
U.S. cases: More than 1.6 million
U.S. deaths: More than 98,000

Market Reaction:

US futures traded 1% higher on Tuesday morning after coming back from Memorial Day holidays. The Dow Jones futures indicated an opening near the 25.000 level, while Nasdaq futures traded above 9.600.

Asian markets rose on Tuesday after China’s central bank said it would strengthen economic policy to support the economy. Nikkei and Kospi indices led the gains with 2%, despite the growing tensions between U.S and China.

Crude oil:

Crude oil prices gained 2% on Tuesday morning, supported from the expectation that the oil fundamentals will be balanced in coming weeks. The imbalance between demand and supply has decreased amid improved gasoline demand as more people have started using cars after lockdowns and from the ongoing supply cuts led by OPEC+ and US shale oil producers.

WTI crude price climbed above $34 per barrel while Brent crude traded at the $36 level. Both prices have gained more than 100% since they bottomed in late April.

Furthermore, oil prices received a boost yesterday after comments from Russian oil minister Alexander Novak, reporting the country’s oil output had nearly dropped to its target of 8.5 million bpd for May and June under its supply cut deal with OPEC.

Precious Metals

Precious metals had a strong rally supported from the weaker US dollar and tensions in Venezuela and Hong Kong. Gold price rose to $1.735/oz, up 0.5%, Silver up 2% to $17.50/oz, while Palladium price rallied 3% this morning by breaking above the key resistance level of $2.000/oz.

Forex Market:

Risk sensitive Australian & New Zealand dollars rose 0.5% against the safe-havens US dollar and Japanese Yen, benefiting from the improved risk sentiment and stock market rally.

The US dollar index dropped to the 99.60 level, its lowest since last week, while EUR/USD broke above 1.09 level, and GBP/USD rose near 1.225.
The Chinese yuan, a barometer of relations between US and China, fell to 7.143, though it remains near a two-month low of 7.16 hit on Friday.

Economic Calendar for May 26, 2020 (GMT+ 3:00):

Morning Briefing: Global markets higher on improved risk sentiment

Posted on May 25, 2020July 3, 2020 by Vrasidas Neofytou

Global financial markets and crude oil prices extended recent gains amid the optimism around a potential coronavirus vaccine, stimulus plans and re-opening of economies. The risk sentiment has improved, despite the rising tensions between US-China over Hong Kong’s legal status and the pandemic outbreak in Latin America.

Brazil has the second-highest number of confirmed coronavirus infections worldwide behind U.S., according to data from Johns Hopkins. The Latin American country has more than 350k cases and over 22k deaths. The US administration was considering imposing a travel ban on Brazil shortly after the country’s deadliest day on record from the pandemic.

The World Health Organization warns that the epicentre of the pandemic has shifted from Europe and the U.S. to South America.

Coronavirus Update:

Global cases: More than 5.4 million
Global deaths: At least 345,059
Countries with the most cases: United States (more than 1.6 million), Brazil (363,211), Russia (344,481), United Kingdom (260,916), Spain (235,772).

Market Reaction:

US and UK markets closed on Monday for Memorial Day and Bank Holidays, respectively. However, US futures traded slightly higher, extending last week’s gains as the US economy reopens, amid positive sentiment around a vaccine.

For last week, the US stock markets gained more than 3%, posting their best weekly performance since the start of April. Stocks rallied after positive news about a potential vaccine from Moderna, while Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said that Moderna’s vaccine data looked “promising”.

Asia markets rose on Monday morning despite the growing tensions between U.S and China. Nikkei and Kospi indices led the gains with 1%, while Hong Kong shares extended Friday’s losses after China announced a new national security law.

Crude oil:

Crude oil prices rose 1% this morning, offsetting Friday’s losses on concerns that a resumption of a trade war could damage oil demand.

However, oil prices posted gains for the fourth straight week, supported from recovering global demand and massive production cuts from OPEC and its allies. In addition, prices were boosted from the first signs of lower US crude inventories and the rise in gasoline and jet fuel demand as more people started using their cars and airplanes to travel.

Forex Market:

The US dollar was stronger across the board this morning, as investors prefer the safety of the greenback on rising US-China tensions over Hong Kong’s status.

The DXY-dollar’s index rose just below 100 level, while the EUR/USD fell below 1.09. In addition, the greenback was stronger against China-linked currencies of the Australian and New Zealand dollars amid concerns over trade tensions in the region.

Economic Calendar for May 25, 2020 (GMT+ 3:00):

Morning Briefing: Global markets extend losses on China-Hong Kong tensions

Posted on May 22, 2020July 3, 2020 by Vrasidas Neofytou

Global financial markets fell on Friday morning as tensions in Hong Kong and between the US and China have escalated. The resumption of trade tensions between the world’s two largest economies, has raised worries about the Phase 1 trade deal signed in January 2020. Both geopolitical events have interrupted the recent rally in global markets and crude oil prices amid higher optimism for economic recovery after pandemic.

Hong Kong tensions:

Risk aversion sentiment has dominated the global markets since China announced plans to impose a new national security law on Hong Kong, after months of anti-government protests. The Chinese decision increased worries that the new law will give Beijing more control over Hong Kong, a former British colony that returned to Chinese rule in 1997 and threatens to spur further pro-democracy protests.

Hong Kong, which has become a leading financial and trade centre, is governed under the “one country, two systems” principle which is meant to guarantee a high degree of autonomy for the special administrative region of China.

Coronavirus Update:

Global cases: More than 5.1 million
Global deaths: At least 332,900
U.S. cases: More than 1.57 million
U.S. deaths: At least 94,702

Market Reaction:

Asian markets plunged on Friday morning, following the latest developments in Hong Kong and rhetoric around US-China tensions, as China plans to impose new national security laws for Hong Kong after months of anti-government protests. Hang Seng index led losses with 5%, while Nikkei and Kospi followed with 2% losses.

US markets fell 1% on Thursday, retreating from 2-months highs, on renewed tensions between the US and China. The Dow Jones Index closed at 24,474, down -0.4%, while the S&P 500 and Nasdaq Composite fell nearly 1%, on losses in tech sector.

In addition, the Dow Jones futures extended their losses this morning, indicating an opening near 24.260 or -0.7%, after President Donald Trump said that US would react strongly if China imposes national security laws for Hong Kong.

On Wednesday, May 20th, the US Senate passed a bill that would potentially delist Chinese stocks such as Alibaba and Baidu from U.S. exchanges. That measure was passed after President Donald Trump said in a tweet that the “incompetence of China” caused “this mass Worldwide killing,” referring to the coronavirus.

Crude oil:

The recent massive crude oil rally has interrupted after the renewed trade tensions and Hong Kong developments.

WTI and Brent crude oil prices were down more than 5% on Friday morning, traded at $32 and $34.50 per barrel respectively, as investors concern that a resumption of the trade war could damage the global economic recovery and hence, the crude oil demand.

Precious Metals:

Gold price fell 1% on Thursday as investors booked profits from recent rally and some switched to the safety of US dollar driven by growing trade tensions. Silver and Palladium prices also settled lower by 3% at $17 and $2.000/oz, respectively.

Forex Market:

The US dollar traded higher against all the major currencies, supported from safety flows, as investors worry about ongoing trade tensions and Hong Kong developments.

The DXY-dollar’s index rose to 99.70, up 0.3% while EUR/USD dropped back to 1.09 level. Furthermore, Australian and New Zealand dollars fell 0.8% against US dollar and Japanese Yen, on their economic ties with Chinese economy.

Economic Calendar for May 22, 2020 (GMT+ 3:00):