Portfolio

US open: Banks outperform on prospect of easier regs

By Alexander Bueso

Date: Thursday 25 Jun 2020

US open: Banks outperform on prospect of easier regs

(Sharecast News) - Wall Street was trading on the back foot on Thursday amid ongoing worries about the risk of a second pandemic wave, although news that regulators were set to ease some rules on banks had put a solid bid into the sector.

A mixed batch of economic data did little to lift sentiment, with analysts pointing out the future near-term direction of the economy remained very much dependent on whether lockdowns could be lifted and how quickly.

"The rising number of coronavirus cases we're continuing to see in the US, in particular, is a major concern despite the Trump administrations previous refusal to lockdown the economy again," said Craig Erlam, senior market analyst at Oanda Europe.

"I imagine there will be significant resistance to restrictions being reimposed but the fear is that they are left with no other option and the recent trends we're seeing in the data is a worry."

As of 1606 BST, the Dow Jones Industrials was trading down by 0.31% to 25,366.93, while the S&P 500 was down by 0.36% to 3,039.53 and the Nasdaq Composite by 0.27% to 9,882.70.

On the flip-side, the KBW Bank Index was 1.18% higher after Bloomberg reported that the FDIC and the might soon ease restrictions on lenders using their balance sheets to invest in companies or financial assets, and as regards their required levels of reserves.

According to the Department of Labor, over the week ending on 20 June, initial unemployment claims dropped by 60,000 to 1.48m.

Economists had forecast a larger drop to 1.25m.

Initial unemployment claims in Arizona soared by 31.8% while in Pennsylvania they rose by 7.6%.

"The danger now is that claims rebound in other states where infections are rising rapidly, and people are starting again to stay away from restaurants and malls," Ian Shepherdson at Pantheon Macroeconomics mused.

Meanwhile, orders for goods made to last more than three years jumped in May, nearly reversing the previous month's sharp fall.

US durable goods orders grew at a month-on-month pace of 15.8% to reach $187.589bn (consensus: 12.0%).

Elsewhere, the US trade deficit in goods widened at a 5.1% month-on-month pace in May to reach $74.3bn, instead of narrowing to $68.3bn as anticipated.

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