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Weekly financial market overview 20.07.-26.07.

News - July 27, 2020



Konstantins Goluzins, CFA

Head of Asset Management
Phone.: (+371) 6700 0456
E-mail: trust@bib.eu


Main events of the previous week

On July 21, after four days of negotiations, the leaders of the European Union countries finally agreed on a financial aid package to combat the pandemic and its aftermath. The plan is to provide 750 billion euros in grants and repayable loans to help the economy and citizens of the 27 countries of the union. This is the largest loan package in the history of the European Union. During the negotiations, a group of countries - Sweden, Denmark, Austria and the Netherlands, as well as Finland categorically opposed monetary gifts and demanded to cut the proposed aid package by almost half. The non-refundable part of the aid, still approved unanimously, consists of 390 billion euros intended for the countries most affected by the coronavirus. Italy and Spain are expected to receive it first. Of the remaining 360 billion euros, each EU member state will be able to get a loan at a low interest rate. The agreed economic package has yet to go through the stage of technical consultations within the EU and ratification in the European Parliament. 750 billion euros will be taken not from the EU budget, but as borrowings from the European Commission on international financial markets. The European Commission will also distribute aid, but the member states will have a mechanism to influence the money distribution plan..

Economic data

USA. The number of initial jobless claims for the week again began to grow and amounted to 1 million 416 thousand, which is 109 thousand more than the week before and 116 thousand more than analysts predicted.

According to the preliminary assessment of the PMI business activity index in July, the indicator increased by 2.1 points and amounted to even 50. Of the indicators constituting the index, business activity in the services sector was higher by 1.7 points, and the state of the manufacturing sector increased by 1.5.

Eurozone. According to the preliminary assessment of the PMI business activity index in July, the indicator increased by 6.3 points and amounted to 54.8. Of the indicators composing the index, business activity in the service sector was higher by 6.8 points, while the state of the manufacturing sector increased by 3.7 points.

Key events this week

  • This week in the US Congress there will be a debate on a new package of assistance to the economy, as the current measures expire at the end of July, in turn, in the old world, negotiations will be held between the UK and the EU on the terms of further relations after Brexit.
  • On Monday, the US is to publish data on sales of durable goods in June.
  • On Wednesday, the US will publish data on the change in oil reserves for the week, and the Fed will publish its decision on the key interest rate and hold a press conference.
  • On Thursday, in the eurozone the unemployment rate in June will become known, in turn, the US will publish the state of GDP for the second quarter, as well as the number of initial jobless claims for the week.
  • On Friday, the eurozone will publish data on the state of GDP in the second quarter, as well as on inflation for June, the US will show the income and expenses of citizens for June, and in China, the state of the industrial sector in July will become known.

The information provided herewith has an informative nature. This information cannot be regarded as an offer or recommendation for purchase, storage or sale of securities, or as an investment recommendation, an investment survey or a consultation on investments, or a recommendation to entrust management of your assets to the specific investment manager. The Client is fully aware and undertakes all risks involved in the investment. This information is prepared by AS Baltic International Bank.

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