Week from 17 to 23 August 2020
The S&P 500 and the NASDAQ clinched new closing records on Friday, lifted by Apple (+8.23% week-over-week) and Amazon (+4.34%). Both benchmarks therefore notched their fourth weekly gain in a row (+0.72% and +2.65% respectively), shrugging off the Fed’s comments on new stimulus measures (“not warranted in the current environment”), the rise in the U.S. weekly jobless claims (1.106 million vs. 920,000 expected for the week ended Aug. 15) as well as the second straight decline in the Philly Fed Manufacturing index (17.2 in July after 24.1 in June).
By contrast, the Dow Jones Industrial Average was flat and small-cap indices underperformed their large counterparts (Russell 2000 down -1.61%).
Among the S&P sectors, technology and communication services are still viewed as the most reliable to ride out the crisis (+3.48% and +1.73% over the week). Conversely, it was a tough week for energy (-6.11%, hit by oversupply concerns a day after OPEC and its allies suggested that the pace of recovery in oil demand had been slower than expected) and financials (-3.44%) as yields moved lower (10-year U.S. government yield down -7bps at 0.64%) and the Fed warned that the impact of the COVID-19 pandemic would “weigh heavily on economic activity.”
In Europe, the bearish trend resumed (MSCI EMU down 1.61%) as the IHS Markit Eurozone Services PMI plunged to 50.1 vs. 54.5 expected, i.e. a level that is synonymous with stagnation.
In Asia, last week’s winners pared their recent gains (NIKKEI 225: -1.58%, KOSPI: -4.27%, Hang Seng: -0.27%) while the previous losers rebounded strongly (e.g. India, NIFTY 50: +1.72%), thereby offsetting all their losses.
In credit markets, investment grade bonds moved back into positive territory (+0.38% in Europe, +0.21% in the U.S.). High yield bonds hovered on both sides of the Atlantic (+0.02%) while emerging debt in local currencies fell 0.58%.
In commodity markets, gold steadied at $1,934.6/Oz (-0.12%), after the jump in bond yields saw it lose 3.64% last week in its worst weekly performance since mid-March.
Find the full report here: https://www.trackinsight.com/en/weekly-flow-report/2020-08-21/global