Weekly Feed5 Mins Read
Kristal Weekly Feed | 06 July 2020
These are tough times and it can get difficult to understand and analyze major events around the globe and how they affect your investments. In our weekly market update, we help you slice and dice the latest news updates to make informed investment decisions.
Headlines this week:
- Dow closes 800 points higher after jobs report shows surprise jump in payrolls, fall in the unemployment rate
- Gold prices rose 13% in the second quarter, their biggest quarterly gain in four years
- Coronavirus: New COVID-19 clusters across the world
- Overall, virtually all of the major indices across the globe closed with a week high
Covid-19 totalled 11,395,431 confirmed cases around the globe and the death toll is at 533,773.
Some positive news snippets:
- In China, the Central Military Commission approved the use of a COVID-19 vaccine co-developed by its research unit and CanSino Biologic, a Chinese vaccine company, after clinical trials proved it was safe and showed some efficacy, the company said in a filing on June 25. The shot also won approval for human testing in Canada
- Thailand notes that they are on track for Covid-19 vaccine human trials
- Singapore announced on June 16 that scientists were testing a COVID-19 vaccine from U.S. firm Arcturus Therapeutics and plan to start human trials in August after promising initial responses in mice.
- Two Indian firms – Bharat Biotech and Zydus Cadila – have been given approvals for fast-tracking their homegrown vaccines and plan to enter phase I/II trials in July.
1. United States
U.S major indexes finished a week higher as favorable jobs data came in as confirmed cases of coronavirus reached record highs and some states began to suspend or reverse reopening plans.
Treasury yields fell slightly back, while the U.S. dollar, gold, and crude oil prices traded higher.
U.S. Federal Reserve’s most recent policy meeting show that officials considered additional economic stimulus measures beyond stating that short-term interest rates are likely to remain near zero through at least 2022. The U.S. May unemployment rate fell to 13.3% from 14.7%.
The Bureau of Labor Statistics raised the loss of jobs in April to 20.7 million from 20.5 million. The positive jobs numbers failed to impress the bond market, with the yield on the benchmark 10-year Treasury note falling back.
European stocks rose through Thursday on encouraging news related to the development of a potential coronavirus vaccine and improving economic data. The pan-European STOXX Europe 600 Index ended 2.11% higher for the first four days of the week. Germany’s DAX Index rose 3.33%, France’s CAC-40 Index added 2.41%, and Italy’s FTSE MIB Index gained 3.11%. The UK’s FTSE 100 Index increased by 0.58%.
Both France and Germany saw record surges in consumer spending and retail sales. Manufacturing PMIs for June were revised higher in Germany, France, and Italy. Most major stock markets in Europe saw gains. UK Prime Minister Boris Johnson said the government would fast-track GBP 5 billion of spending on infrastructure works to help an economic recovery. More details are expected to be revealed on July 8.
The Stoxx 600 Index fell after Bloomberg News reported the European Central Bank is facing a potential conflict over how much their emergency bond-purchase program should stay weighted toward weaker countries such as Italy. The decision will heavily impact the European stock market given the rally is largely based off stimulus
Asia Pacific saw a mixed response at the end of the week, dragged along by the developments in the U.S. The regional benchmark MSCI Asia Pacific now trades at 18x its forward earnings, an increase from its 11x in the March low. This pales in comparison and is only half of the expansion seen in the S&P 500’s forward price-to-earnings multiple of 22x before the week’s correction.
Better than expected industrial profits and manufacturing indices in China lifted most Asian markets. This included Hong Kong, despite the US suspension of preferential treatment for the territory after China passed its new national security law and began implementing it July 1
Japan bucked the global rally and was the only major developed market to see stocks retreat. In contrast to strong rebounds seen elsewhere in May, Japan reported its fourth consecutive month of falling industrial production and retail sales.
Heading into next week…
The COVID-19 story isn’t going away anytime soon, so we can expect more headlines about continued outbreaks and the resultant effects on global economies. This week, we will also be eyeing earnings returns from some major companies and hoping it sends shares of Bed Bath & Beyond (NASDAQ: BBBY), Levi Strauss (NYSE: LEVI), and PriceSmart (NASDAQ: PSMT) moving up.
The materials and data contained herein are for information only and shall in no event be construed as an offer to purchase or sell or the solicitation of an offer to purchase or sell any securities in any jurisdiction. Kristal Advisors does not make any representation, undertaking, warranty or guarantee as to the update, completeness, correctness, reliability or accuracy of the materials and data herein. All opinions, forecasts or estimation expressed herein are subject to change without prior notice. Kristal Advisors and its affiliates accept no liability or responsibility whatsoever for any direct or consequential loss and/or damages arising out of or in relation to any use of opinions, forecasts, materials and data contained herein or otherwise arising in connection therewith.
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