Week from 20 to 26 July 2020
US stocks wavered as investors showed caution after a dramatic escalation in tensions between the world’s two biggest economies, a jump in jobless claims (+1.416 million last week) and some weakness in the largest technology companies.
China indeed ordered the closure of the American consulate in Chengdu, retaliating against Washington’s move earlier this week to shut down the Chinese consulate in Houston (Texas).
The S&P 500 was down 0.28%, the Dow Jones Industrial Average slumped 0.76%, while the Nasdaq Composite fell 1.33% as mega-cap tech was again under pressure. Shares in Apple therefore tumbled by over 3.85% after Goldman Sachs questionned the stock price. Facebook also dragged the index lower, losing 4.9% week-over-week but the worst performance came from Intel (-15.68%) after the company announced its next-generation chips (7nm CPUs) will be delayed.
As a result, information technology was the biggest laggard (-1.54% WTD) among the S&P sectors, just before communication services (-1.14%) and health care (-0.74%). The rotation between the recent winners and losers is still underway. Thus financials (+1.25%), consumer staples (+0.81%) and materials (+0.53%) exhibited their fourth winning week in a row.
European equity markets closed lower (MSCI EMU down -1.30%) though EU leaders reached a deal on the coronavirus recovery package after marathon talks. Asian markets finished the week with mixed results (Shanghai Composite: -0.54%, S&P/ASX 200: -0.16%, KOSPI unchanged, NIKKEI 225: + 0.24%, and NIFTY 50: +2.68% as market sentiment was boosted by Finance Minister Nirmala Sitharaman who promised more policy interventions to revive the economy).
On the interest rate front, the yield on the 10-year US T-notes inched down from 0.64% to 0.59% while the 10-year Bund remained unchanged at -0.47%. Credit markets continued to rally across the globe: fourth week in the green for IG corporate bonds (+0.41% in Europe, +1.34% in the US) and high yield bonds (+0.85% in Europe, +1.52% in the US). Emerging debt followed the same trend (+1.24% in local currencies).
Helped by a very weak US dollar (EUR-USD : +1.78% WTD at 1.1626), gold temporarily breached $1,900/Oz before closing at a new all-time high ($1,897, i.e. +4.83% WTD).
Find the full report here: https://www.trackinsight.com/en/weekly-flow-report/2020-07-24/global
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