Weekly markets recap 26.10.2020

U.S.

The major benchmarks ended last week mixed, investors closely watching stimulus negotiations and monitoring third-quarter corporate earnings reports. The Nasdaq Composite Index performed worst, caused mainly by Apple´s weakness, while the small-cap Russell 2000 index recorded modest gains. Within the S&P 500 Index the worst performing sector was also technology, communication services shares were strong, led by internet giants Facebook and Alphabet (parent company of Google).

President Donald Trump repeated his willingness to back a stimulus deal even larger than the USD $2.2 trillion relief package proposed by Democrats. But stocks moved lower as opposition to a large new package grew in the Republican-led Senate.

The earnings reporting season brought 91 S&P 500 companies third-quarter results last week. Netflix shares fellsharply on Wednesday, after the comapny reported less subscriber gains as it was expected. The social media company Snap surged on positive surprises in profits, revenues, and user growth. As another neagtive example, shares of Intel, a Dow Jones Industrial Average 30 component, fell over 10% in early trading Friday after disappointing data.

S&P 500

EU

European shares fell amid tighter restrictions to curb surging coronavirus infections, which can hinder economic recovery. Germany’s DAX Index slipped 2.04%, France’s CAC 40 gave up 0.53%, and Italy’s FTSE MIB dropped 0.54%. The UK’s FTSE 100 Index lost 1.00%. The pound gained strength after the resumption of talks with the European Union (EU) on post-Brexit trade ties. UK stocks tend to fall when the pound rises because the index includes many multinationals with overseas revenues.

DAX 30

Japan

Japanese stocks closed in the green for the week. The Nikkei 225 Stock Average advanced 106 points (0.5%) and closed at 23,516.59. The large-cap TOPIX Index and the TOPIX Small Index, broader measures of Japanese stock market performance, posted mixed results. The yen strengthened modestly and traded below JPY 105 per U.S. dollar on Friday. The Bank of Japan’s (BoJ) policy-setting committee will convene on October 28–29 and is expected to lower its projections for gross domestic product (GDP) growth and inflation for the current fiscal year, which ends on March 31, 2021. Exports also fell by 4,1% in September compared with the same period in 2019, but shipments to the U.S. rose.

NIKKEI 225

China

Chinese stocks retreated for the week, with the large-cap CSI 300 Index and benchmark Shanghai Composite Index shedding 1.5% and 1.8%, respectively. The People’s Bank of China Governor Yi Gang said that China’s key debt ratios could moderate in the coming months as economic growth picks up. The renminbi currency continued its strengthening against the U.S. dollar aided by strong inflows into China’s domestic bond market, whose relatively high yields have attracted foreign investors. China also reported 4.9% GDP growth in the third quarter from a year earlier, indicating that the economy is gaining momentum.