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U.S. daily cases top 60,000 for the first time, IEA warns on oil demand, and tariff tussle with France resurfaces.
The spike in Covid-19 cases in Sun Belt states shows no signs of easing, with deaths hitting a daily high in Texas and Florida. In Mississippi, the leaders of both legislative houses were among 26 lawmakers to test positive for the disease. President Donald Trump is set to visit Florida for a fundraiser today as the ongoing crisis takes a toll on his support. Outside the U.S., Hong Kong announced it will close schools again to help contain a new bout of cases while China said it had found the virus in samples of imported shrimp, raising questions over whether the pathogen can be spread through food.
The International Energy Agency said that demand for crude should rebound sharply over the next three months as economic activity resumes, while bloated stockpiles will diminish as OPEC and its allies persevere with production cuts. The forecast warned however that the outlook could be derailed by the upsurge in the virus. It seems oil traders are paying more attention to the warning than to the optimistic outlook, with a barrel of West Texas Intermediate for August delivery dropping as low as $38.54 in the wake of the report.
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The long-running dispute between the U.S. and France over taxes on technology giants takes another move forward today with Washington set to announce details of tariffs on $500 million to $700 million of goods. The duties aren’t expected to come into effect, though, until French authorities start collecting taxes on companies including Amazon.com Inc., Alphabet Inc.’s Google and Facebook Inc. It’s not only tech companies caught in the crosshairs of geopolitics, global banks operating in Hong Kong face huge regulatory headaches as they try to follow China’s new security law while staying on the right side of possible U.S. sanctions.
There’s something of a mixed bag in global equities this morning, with Chinese shares turning lower, while virus fears continue to put a cap on U.S. futures. Overnight, the MSCI Asia Pacific Index dropped 1% while Japan’s Topix index slumped 1.4%. In Europe the Stoxx 600 Index was 0.3% higher by 5:50 a.m. Eastern Time as tech shares rallied. S&P 500 futures pointed to a lower open, the 10-year Treasury yield was at 0.579% and gold rose.
The U.S. producer price index for June at 8:30 a.m. is expected to show a small recovery in the core measure. The Canadian June labor report is also at 8:30 a.m. The U.S. Department of Agriculture’s WASDE report is at 12:00 p.m. and the Baker Hughes rig count is at 1:00 p.m. The first tropical storm warning for New York since Hurricane Sandy has been issued, with Fey expected to hit the city tomorrow.