Weekly Feed5 Mins Read
Kristal Weekly Feed I 20th January 2020
With a busy schedule, 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:
- The US-Iran tensions eased this week leading to oil reaching a five-week low
- Asian stocks had a mixed week with the first phase of the trade deal being signed between China and the US
- European stocks have a mixed week too amidst trade and geopolitical developments
- US markets have an optimistic week with stocks reaching record highs
While last year was riddled with the trade war between China and the US, December gave investors hope as the two countries agreed to sign a trade agreement on January 15, 2020. Also, 2020 started with escalating tensions in the Middle East after the airstrike by the US on Iran. This week was good news on most fronts.
How did the week start?
- United States: On Monday, Wall Street managed to recover most of the losses of last week as investors were optimistic about the upcoming trade deal with China. The S&P 500 rose by 0.7%, the Dow Industrial Average rose by 0.3%, and the Nasdaq Composite rose by 1%.
- Europe: The European markets remained muted for most of the day as investors awaited the phase-one deal between China and the US and positive news from the Middle East. The Stoxx 600 Index closed 0.18% lower.
- Asia-Pacific: The upcoming trade deal brought optimism and hope to most Asian investors. The Shenzhen Composite Index rose by 1.36%, the Shanghai Composite Index rose by 0.75%, and the Hang Seng Index climbed 1.11%. While Japan’s markets were closed on Monday, the South Korean Kospi Index climbed 1.04% on Monday.
As the week progressed, markets around the globe remained volatile. Chinese negotiators arrived in the US on Tuesday building up excitement for the trade deal with investors eagerly watching every development as it unfolded.
Let’s take a look at how the global markets performed during the week:
The markets started optimistically on Monday with all three major indices closing higher. On Tuesday, reports from the US administration about maintaining tariffs on Chinese goods until the completion of phase two of the trade agreement led to the S&P 500 and Nasdaq Composite indices dropping by 0.2% each. However, once the trade deal was signed, the investor sentiment improved and all three major indices closed in the green on Wednesday. On Thursday, the markets continued their rally based on strong economic data:
- Retail sales in the US grew 0.3% in December
- Initial jobless data declined by 10,000 in the week ending January 11, 2020, and the number of people collecting unemployment benefits decreased by 37,000
- US Housing starts increased by 16.9% to reach a 13-year high indicating that the longest expansion in US history is set to continue further
- Decreasing tensions in the Middle East
By the end of the week, markets posted their biggest weekly gains since August 2019 with the S&P 500 gaining 0.39%, the DOW Industrial Average gaining 0.17%, and the Nasdaq Composite gaining 0.34%.
The European markets had a muted start to the week, as the investors hoped for good news on the trade agreement between China and the US and de-escalation in the Middle East. Pound Sterling dropped to a two-week low and dropped below $1.30 after news about a possible interest rate cut spread. As the Chinese negotiators made their way to the US, European markets turned highly volatile with major indices jumping between highs and lows several times on Tuesday. Pound Sterling edged above the $1.30 mark. Wednesday, the day when the trade agreement was being signed, was a watchful day for investors and the major indices barely moved with Stoxx Europe 600 gaining 0.1%. In the UK, inflation was at its weakest – climbing at a rate of 1.3% as against the expected 1.5%.
While the successful signing of trade agreement did have a positive impact on European markets, trade tensions increased between the Netherlands and China. This led to a mixed market performance on Thursday. The week ended with positive news from around the globe rubbing off optimism on European investors leading to major indices gaining crucial points by the end of the day.
The Asian markets started the week on a high note with most major indices rising by the end of the day. China’s Shanghai Composite Index and Taiwan’s TWII climbed more than 0.70%. The optimism was primarily attributed to the upcoming signing of the trade agreement between the US and China. Oil prices also climbed a notch on Monday after last week’s declines. While most of the markets remained in the green on Tuesday, markets in China and Hong Kong narrated a different story. Wednesday was a bad day for markets in the Asia-Pacific. Many major indices lost points by the end of the day. As the trade agreement was being signed in the US, the investor sentiment was clearly pessimistic.
As most of the Asia-Pacific markets recovered on Thursday when details about the trade agreement between the US and China were released allaying fears about uncertainties in the global economy, Chinese markets failed to regain their losses from Wednesday. However, the week ended on a much positive note with China announcing is growth figures. In 2019, China’s economy grew by 6.1% which was in line with expectations despite the trade war with the US. The markets in China initially spiked on Friday but lost the gain by the end of the day. Most Asia-Pacific markets were in the green with Japan and South Korean markets jumping to 15-month highs.
Heading into the next week…
As the tensions in the Middle East eased, markets around the globe awaited the signing of the trade agreement between China and the US with bated breath. Although that is done now, there is still a lot of uncertainty around the implementation of the same and the way forward. While the global economy should stabilize, investors will do well to keep themselves updated with major developments and their effects on economies around their globe.
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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