Singapore GDP collapsed by a record 41.2%
14 July

Singapore GDP collapsed by a record 41.2%


The Trump administration rejected Beijing's expansive maritime claims in the South China Sea, reversing a previous policy of not taking sides in such disputes further straining the tensions between the world’s biggest economies. The Chinese Embassy in the U.S. called the actions “completely unjustified" and denounced them for inciting tensions in the region. Riskier assets are likely to take a hit as tensions arise also following California’s decision to place new restrictions on businesses. Tech majors suffered after the most populous U.S. state shut bars and restaurants to contain a surge of coronavirus infections, raising fears it may slow a U.S. economic recovery. The dollar was marginally higher in narrow ranges against most currencies as investors returned to the world’s main reserve currency.


China’s exports and imports both rose in June, despite most forecasts predicting a decline for both. Data due later this week on Chinese gross domestic product retail sales and industrial output are expected to show that the world’s second-largest economy has staged a V-shaped recovery in the second quarter. Markets now face reciprocal retaliation measures between Washington and Beijing over access to US financial markets, civil liberties in Hong Kong and territorial claims in the South China Sea. The yuan fell to 7.023 per dollar as worries about the Sino-U.S. relationship slowed the Chinese currency’s recent rally.


The euro held onto gains against the greenback and the pound as investors await data on German investor sentiment to help gauge the pace of Europe’s recovery from the health crisis. The common currency traded at 90.62 pence, holding onto a 0.9% gain from the previous session. The dollar traded at 0.9405 Swiss franc after registering three consecutive sessions of narrow gains. The dollar stood at 107.28 Japanese yen following a 0.4% gain in the previous session. The Singapore dollar and other Asian currencies fell after data showed Singapore’s GDP collapsed by a record 41.2% in the second quarter, highlighting the damage that the pandemic can inflict on small, trade-reliant economies. The Australian dollar was little changed at $0.6934. The Aussie has taken a hit as some Australian states have also re-imposed coronavirus restrictions. The New Zealand dollar erased early losses to trade at $0.6517. The Antipodean currencies are considered barometers of risk because of their close ties to commodities and China’s economy.


European futures are pointing lower after Asian stocks erased much of Monday's gain, driven by a huge contraction in Singapore's economy. In New York, the S&P 500 briefly touched its highest since the pandemic sell-off in March, before closing lower. The Nasdaq followed the same path, hurt even more by the business restrictions in California. UK’s blue-chip FTSE 100 was down 0.7%, with only a handful of stocks trading higher as health experts warned of a deadly second wave of the COVID-19 pandemic in the UK and a surge in cases worldwide. European stocks followed the downtrend opening lower this morning, hit by the overnight drop on Wall Street. The pan-European STOXX 50 index fell over 1%.


Blog Section

Last Updated

Share This Post

Why is PhillipCapital UK the right choice for you?

Request More Information