Week from 6 to 12 July 2020
Although the infection rate is still growing rapidly in the U.S. (confirmed cases now exceeding the 60,000-a-day mark), Wall Street extended gains on Friday as BioNTech and Pfizer lifted sentiment after their CEOs announced that a treatment could be ready for approval by December. Dr Anthony Fauci added that he was “cautiously positive” about having a vaccine available by early 2021.
The S&P 500 surged 1.76%, the Dow Jones Industrial Average rose 0.96% and the Nasdaq Composite climbed as much as 4.01%, to a fresh all-time high of 10,617.44, as FAANG stocks were sparkling again (Facebook +4.99%, Google-Alphabet +5.26%, Apple Inc. +5.37%, Amazon +10.71%, Netflix +15.06%). On the other hand, small cap stocks significantly underperformed their large cap counterparts (Russell 2000 down 0.64%, bringing the S&P 500 return in excess to the Russell 2000 to 13.31% YTD!).
Tech fared well (+2.70%) but two other S&P sectors did better over the week: consumer discretionary stocks (+4.83%), boosted by Amazon which topped $3,200 for the first time ahead of the quarterly earnings season, and communication services (+4.68%). By contrast, energy lagged behind (-4.64%). WTI is still facing huge resistance (closing at $40.55 per barrel, up 0.67% WTD) from the gap that grew out of the Saudi-Russia price war. Real estate (-1.76%) and industrials (-1.39%) were also losing momentum.
European stock markets ended the week with mixed results (CAC 40 down 0.73%, DAX 30 up 0.84%, FTSE 100 down 1%), awaiting for the meeting of the EU leaders, on July 17-18, for any further news on the €750bn recovery fund.
In Asia, the Shanghai Composite continued its three-week winning streak (+7.31% WTD) in anticipation of faster economic recovery while the Nikkei inched down 0.07%.
On the interest rate front, yields on govies remained virtually unchanged (U.S. 10-year: +0.65%, Germany 10-year: -0.47%).
IG corporate bonds gained ground (+0.29% in Europe, +0.80% in the U.S.), outperforming high-yield bonds once again (+0.16% in Europe, +0.29% in the U.S.). Emerging debt followed suit (+0.79% in local currencies).
Lastly, it is worth noting that gold which benefits from very low interest rates across the globe topped $1,801.90/Oz (+0.94%). This bullish trend is consistent with the net selling of U.S. Treasury securities and dollar weakness.
Find the full report here: https://www.trackinsight.com/en/weekly-flow-report/2020-07-10/global