Wall Street slumped for the fourth week in a row (S&P500 down -1.44% vs. -1.83% for the Nasdaq Composite and -2.29% for the Russell2000) as Trump was ordering U.S. companies “to immediately start looking for an alternative to China” while imposing an additional 5% duty on $550bn in Chinese exports after Beijing announced it would raise tariffs on a variety of U.S. products accounting for $75bn, including cars and farm products. Fed Chairman Jerome Powell had told a short time before at the annual monetary policy conference in Jackson Hole that the U.S. central bank could not fix the trade war’s damage to the economy, though he stood ready to provide stimulus if necessary. To which Trump responded: “my only question is, who is our biggest enemy, Jay Powell or Chairman Xi?”
Against the current backdrop of heightened tensions, a majority of S&P sectors suffered severe weekly losses, often higher than that of the S&P500 index (e.g. energy: -1.99% ; health care: -1.95% ; financials : -1.90% ; information technology: -1.42%). As usual, the most defensive sectors (utilities: +0.19%, and real estate: -0.29%) weathered the storm.
Globally, the same held true of European and Asian indices by contrast with their U.S. pairs (MSCI EMU: +0.29% WTD, Nikkei225: +1.43% ; Shangai Composite: +2.61%).
Unsurprisingly, the U.S. 10-Year Treasury yield fell up to a session low of 1.51% on Friday (1.54% at the end of the day, almost in line with the 2-Year note yield, 1.53%), indicating the chances of a recession are mounting. Among safe havens, gold kept up its winning streak at $1,526.60/oz (+0.93%).
Find the full report here : https://www.trackinsight.com/weekly-flow-report/2019-08-23/global