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Weekly Feed5 Mins Read

Kristal Weekly Feed | 29 June 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:

  • Wall Street and Treasury Yields tumbled due to the record jump in coronavirus cases in the US. Dow registered its worst one-day loss since June 11 on Friday
  • Two-month oil rally has stalled due to second wave fears and rising U.S. crude stockpiles concerns
  • Coronavirus: New COVID-19 clusters across the world
  • Overall, virtually all of the major indices across the globe saw a retracement for the week

Tracking COVID-19

Covid-19 is approaching 10,000,000 confirmed cases around the globe and the death toll is at 498,841.
Some positive news snippets:

  • Although new cases are climbing, the death rate has not followed suit and hospitals are not overwhelmed
  • Thailand notes that they are on track for Covid-19 vaccine human trials
  • Fed set up several new lending facilities to bolster the economy during the COVID- 19 pandemic

Market Update

1. United States

U.S major indexes have been rather flat until several U.S states imposed business restrictions in response to a surge in corona virus cases, with S&P 500 falling 3.5%. The rest of the U.S.’s major stock indices Nasdaq and Dow Jones each saw a weekly decline of 3.3% and 3.9% respectively. Treasury yields fell due to the second wave and global supply chain concerns.

Bank shares plummeted after the Feds limited dividend payment and bans shares buyback until at least the fourth quarter following its annual stress test.

The boosters
U.S unemployment rate fell to 13.3% in the first quarter of 2020, down from 14.7% the previous quarter which pushed the tech-heavy Nasdaq over the 10,000 marks.

The dampeners
Fears of the emergence of a second U.S. virus wave erased gains in Oil prices from optimism over rising road traffic boosting fuel demand.
US Federal Reserve’s forecast of a 9.3 percent unemployment rate for the end of the year.

2. Europe

European stocks fell due to dimming prospects for a recovery in the global economy. The Stoxx Europe 600 index, SXXP, saw a weekly decline of 2.5% to 358.32.

European stocks had been largely supported by a $676 billion boost to Europe’s Pandemic Emergency Purchase Programme, bringing the coronavirus rescue package to a total of $1.53 billion.

The boosters
Air France-KLM jumped 5% after governments of France and Netherlands reached a deal on an aid package for the airline group, with the latter saying it would provide a 3.4 billion euro ($3.81 billion) financing package.

The dampeners
Wheat forecasts grow bleaker as Europe’s wheat growers faced a season of tumultuous weather and overly wet autumn that hampered plantings and spring drought which cuts wheat supply. EU soft wheat exports in the coming year may fall by more than a quarter, to 25 million tons which are informed by the commission.

3. Asia Pacific

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.

Hong Kong’s Hang Seng index inched down 0.9% for the week after U.S. lawmakers moved closer to sanctioning people and companies they consider China’s accomplices in curbing the city’s autonomy, while new coronavirus outbreaks globally also soured the sentiment.

Japanese stocks, on the other hand, bounced back by 1.1% to 22,512.08 as US banking regulators ease rules around firm investments, internal trading. Which helped to t helped to offset investor jitters over alarming increases in new coronavirus cases.

China’s central bank injected 100 billion yuan (about 14.17 billion U.S dollars) into the market through seven-day reverse repos at an interest rate of 2.2 percent. A reverse repo is a process in which the central bank purchases securities from commercial banks through bidding, with an agreement to sell them back in the future.

Disclaimer

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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