Weekly Feed5 Mins Read
Kristal Weekly Feed | 27 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:
- U.S. stocks end the week on a mixed note as market rotation continues
- In Europe, a new fiscal stimulus boosts hope. The timing and level of additional stimulus in the U.S. remains cloudy
- Weekly jobless claims increase for the first time since March in the U.S.
1. United States
U.S. stocks had a mixed week after surrendering early gains. The S&P 500 moved within nearly 3% of its all-time high in February. Mid-caps and value stocks regained some of the substantial ground they had lost in recent months to large-caps and growth shares. On the other hand, technology stocks fared low and the NASDAQ traded low as Apple and other stocks declined. Energy stocks outperformed within the S&P 500 as oil prices rallied early in the week.
Most of the gains early in the week were due to the good news surrounding the AstraZeneca vaccine reports. Stocks, however, turned lower on Tuesday as news came in of the White House being unable to meet the deadline to pass a stimulus bill within the next two weeks.
The market turned even lower on Thursday amidst news of the Chinese consulate in Houston being asked to shut down, renewed tensions between China and the U.S., and the downturn on top stocks suggesting concerns over the concentration of risks within the market.
News from the vaccine trials and a renewed stimulus kept European stocks afloat earlier in the week, but the gains soon eroded as tensions between the U.S. and China intensified as the week progressed.
The E.U. reached a historic decision for a deal of EUR 750 million to help boost the economy during the pandemic. The fund comprises EUR 390 billion in grants— slightly lower than the proposed EUR 500 billion—and EUR 360 billion in low-interest loans. Italy is likely to be the biggest recipient.
Business activity in the eurozone grew in July for the first time since February and at the fastest rate in more than two years. In the UK, retail sales were much stronger than expected in June, growing 13.9% sequentially, compared with the consensus estimate of 7.3% and the 12.0% month-over-month increase in May. This improvement reflected the mid-June reopening of nonessential shops and the lifting of lockdown restrictions. Online retail and grocery stores continued to drive activity, while nonfood stores and fuel sales were still below pre-coronavirus levels.
Mainland Chinese stocks declined for the week. The large-cap CSI 300 Index declined 0.9% and the benchmark Shanghai Composite Index shed 0.5%, weighed by a Friday sell-off on news that the Trump administration withdrew consent for China to operate its consulate in Houston, Texas. This unexpected decision rattled investors who viewed it as an aggressive move that would ratchet up bilateral tensions at a time when China’s economic recovery remains fragile.
Japan continued to see spikes in daily coronavirus cases. Though the state of emergency has been lifted in the country, the pandemic has pushed the nation into its deepest recession yet since Abenomics.
No major economic readings were released during the week. In Taiwan, however, double-digit gains for the island’s electronics and information technology output in June were viewed as encouraging news given the close linkages in the electronics sectors between mainland China and Taiwan.
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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