Germany’s industrial production rebounded in May, rising by 7.8% on the month after falling 17.5% in April, in the latest sign that Europe’s largest economy is recovering after lockdown. The bounce-back, lower than the 10% rise economists had been forecasting, was led by a 27.6% surge in production of capital goods. Growth was modest in other areas and factories churned out fewer intermediate goods. A number of indicators in the past days have shown signs that the exporting powerhouse has put the worst of the impact of the coronavirus lockdown behind it. Orders for industrial goods rose 10.4% in May, rebounding from their biggest drop since records began in 1991 the previous month. Production is still well below the levels recorded before the coronavirus crisis. The government expects the economy to shrink by 6.3% this year, its worst recession since World War Two.
European markets opened lower as concerns over the threat to economic recovery of new coronavirus cases in the U.S. and improving but weak German data put the brakes on Monday’s rally. The pan-European Stoxx 50 fell 0.6% at the start of trading, banks shedding 1.2% as all sectors and major bourses slid into negative territory. The German DAX also fell this morning following the release of the industrial production figures. The French CAC was also affected, edging down to 5043.
The dollar found some traction today, as risks from rising coronavirus cases offset strong economic data hurting confidence in an economic recovery from the COVID-19 pandemic. Following yesterday’s slide, the greenback was steady on most majors and held on near a two-week low against a basket of currencies. The Australian dollar pulled back from a one-month high after the country’s second-most populous state announced six weeks of stay-at-home restrictions and a lockdown for the city of Melbourne to curb rising cases. The Aussie was unmoved after Australia’s central bank held the country’s benchmark interest rate at a record low 0.25%, as expected, and said it would maintain its accommodative approach for as long as required. The Chinese yuan picked up where it left off after yesterday’s soaring of Chinese equities, but pulled back from an offshore top after registering its best day against the dollar since December. Commodity currencies have been gaining since April with Aussie climbing 14%, the Norwegian krone 11%, the kiwi 10% and the Swedish krona 8%. The euro retracted from a two-week high touched yesterday, changing hands at $1.1286. The pound and yen continue to be little moved at 1.2492 and 107.61 respectively.
Asian markets look set to rise as investors weigh growing expectations of an economic rebound in China and a resurgent US services industry, brushing off worries about a spike in US coronavirus cases. Data showed US service industry activity rebounded to almost pre-pandemic levels last month, with the headline figure of 57.1 well ahead of expectations around 50.2. Investors are watching nervously as infections surge in the United States and India but are so far taking the view that more massive lockdowns are unlikely. S&P/ASX climbed 0.52% and Hong Kong's Hang Seng index was up 0.68%. On Wall Street, E-mini futures for the S&P 500 inched up 0.08%, the Dow Jones Industrial Average rose 1.78% and the Nasdaq Composite 2.21%.
