Markets weekly update - 30. week



The US benchmarks fell for the fourth consecutive week,  sending the S&P 500 Index briefly into correction territory, or down more than 10% from its recent peak. Last week´s decline marked the longest weekly slide since 2019, as investors continue to digest news that U.S./China trade tensions are rising, a coronavirus vaccine won’t be widely available until April of 2021. Technology stocks helped the Nasdaq Composite Index record a gain for the week, but the  biggest companies of this index, like Facebook Inc. , , Apple Inc. , Microsoft Corp.  and Google parent Alphabet Inc. , are on track for their steepest monthly fall on record, according to Dow Jones Market Data. Falling oil and natural gas prices made energy stocks suffer, while declines in regional bank stocks due to concerns over depressed lending margins put pressure on financials shares.


European shares tumbled as some countries implemented stricter containment measures due to surge in coronavirus infections. Fears of stalling economic recovery also weighed on stocks. In local currency terms, the pan-European STOXX Europe 600 Index ended the week 3.60% lower, while Germany’s DAX Index dropped 4.93%, France’s CAC 40 fell 4.99%, and Italy’s FTSE MIB slid 4.23%. The UK’s FTSE 100 Index lost 2.74%. IHS Markit’s composite purchasing managers’ index (PMI) showed that the recovery in eurozone business activity lost steam in September as rising coronavirus infection rates and social distancing weakened demand in the services sector. An early estimate of the September PMI came in at 50.1, down from 50.9 in August.


Japanese stocks declined last week, shortened by a holiday. The Japanese markets were closed on Monday and Tuesday for Respect for the Aged Day and Autumnal Equinox Day, respectively. The Nikkei 225 Stock Average declined 156 points (0.7%) and closed at 23,204.62. The market benchmark has declined (1.9%) for the year-to-date period. The large-cap TOPIX Index and the TOPIX Small Index, broader measures of Japanese stock market performance, also recorded losses. The yen stayed in a tight range for the week and traded above JPY 105 per U.S. dollar on Friday.


Chinese stocks followed the global correction, with the benchmark Shanghai Composite Index and CSI 300 Index dropping 3.6% and 3.5%, respectively, in their biggest weekly loss since mid-July. China’s central bank left its loan prime rate, the reference rate for new bank loans, on hold for the fifth straight month, as expected. The yuan weakened to CNY 6.82 per U.S. dollar in a risk-off week characterized by broad dollar strength.


The USD rose against the EUR last week due to macroeconomic data from the US and EU and the worst weekly drop in Gold price in 6 months. The U.S. manufacturing sector appeared to remain in good shape as companies restocked inventories depleted in the wake of the pandemic, core capital goods orders—which exclude defense and aircraft orders—rose a solid 1.8%, while July’s increase was revised higher, to 2.5%. New home sales in August reached their best level since September 2006. In EU IHS Markit´s composite purchasing manager index (PMI) showed, that recovery in eurozone business activity lost steam in September. An early estimate of the September PMI came in at 50.1, down from 50.9 in August. The EURUSD pair broke a support level around 1.1720, making a clear way to the downside towards the next support level at about 1.1470.