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Weekly Market Report

14 Sep 2020

14 September 2020


The Market Last Week

Global equities ended mixed last week, as dismal economic data renewed concerns about sluggish global economic recovery from covonavirus led downturn.

UK Markets ended the week in positive territory, amid weakness in the British Pound and mounting concerns that Britain will end its post-Brexit transition period without a trade agreement.

UK’s Halifax house price index rose on a monthly basis in August, recording its strongest growth in prices since the end of 2016.

In the UK, the NIESR GDP estimate unexpectedly advanced in August.

UK’s construction output climbed in July.

In the UK, manufacturing production rose more than market anticipations in July.

UK’s industrial production advanced more than market consensus in July.

The BRC retail sales rose less than market forecast in August.

UK’s gross domestic product (GDP) rose less than market forecast on a monthly basis in July.

In the UK, consumer inflation expectations for the next 12 months dropped in August.

Total trade balance reported a deficit in July.

European Markets ended the week on a positive footing, after the European Central Bank (ECB) lifted its economic growth forecast for the Eurozone.

Eurozone’s GDP declined less than initially estimated in 2Q20.

In Germany, seasonally adjusted trade surplus widened in July.

Germany’s non-seasonally adjusted current account surplus narrowed more than market consensus in July.

In Germany, seasonally adjusted industrial production advanced less-than-expected in July.

Germany’s final consumer price index (CPI) recorded a flat reading in August.

In the Eurozone, the Sentix investor confidence index rose more than market anticipations in September, recording its highest level since February.

ECB President, Christine Lagarde, in her speech, discussed the appreciation of the euro and indicated that the central bank would “carefully monitor” exchange rate movement going forward. Further, she indicated that economic data since last monetary policy meeting in July suggested a strong rebound in activity in line with expectations. However, she warned that uncertainty about the economic outlook continued to weigh on consumer spending and business investment.

US Markets ended the week in red, amid a broad sell off in technology sector stocks.

US NFIB small business optimism index unexpectedly advanced in August.

US JOLTs job openings unexpectedly advanced for the third consecutive month in July.

The MBA mortgage applications rose in the week ended 04 September 2020.

The producer price index (PPI) dropped less than market anticipations on an annual basis in August.

US monthly budget deficit widened less than market anticipations in August.

In the US, the CPI rose more-than-expected on a yearly basis in August.

Consumer credit rose less-than-anticipated in July.

The number of initial jobless claims in the US unexpectedly remained unchanged for the week ended 4 September 2020.

Asian Markets ended mostly weaker last week, amid ongoing tensions between the US and China.

Australia’s NAB business confidence index unexpectedly improved in August.

In Australia, the Westpac consumer confidence index strengthened in September.

Australia’s home loans climbed more than market expectations in July.

In Australia, consumer inflation expectations advanced in September.

China’s CPI advanced in line with market expectations in August.

China’s trade surplus narrowed less than market forecast in August.

In Japan, the preliminary leading economic index advanced more-than-expected in July.

Japan’s economy contracted less-than-anticipated in 2Q20.

In Japan, BOP basis trade balance unexpectedly reported a surplus in July.

Japan’s non-seasonally adjusted current account surplus widened less than market expectations in July.

In Japan, the PPI dropped at par with market forecast in August.

Australia’s NAB business conditions index unexpectedly dropped in August.

In China, the PPI dropped in August.

Japan’s flash coincident index advanced less than market anticipations in July.

In Japan, overall household spending declined in July.


Currency Update

The EUR ended firmer against the USD last week, after the ECB kept its interest rates unchanged and raised its growth forecast for the euro region.
The British Pound ended weaker against the greenback last week, as the UK GDP grew less than expected in the second quarter and amid fears of a no-deal Brexit.
The US Dollar ended mostly weaker against its major counterparts last week, after the US initial jobless claims remained at high levels.


ECB keeps its interest rates and coronavirus-stimulus program unchanged

The ECB, in its latest monetary policy meeting, kept its benchmark interest rate unchanged at 0.00%, as widely expected and maintained the current pace of its emergency stimulus. Additionally, the ECB revised up its growth forecast slightly for 2020. It now expects GDP to drop by 8% this year, from a June estimate of -8.7%. For 2021, the central bank expects GDP to grow by 5% and by 3.2% in the year after that.


The Week Ahead

Going ahead this week, investors will keep a tab on the US NY Empire State manufacturing index, industrial production, capacity utilization, retail sales, Federal Reserve’s interest rate decision, initial jobless claims, the Philadelphia Fed manufacturing survey and the Michigan consumer sentiment index for further direction. Additionally, Eurozone’s industrial production, the ZEW economic sentiment index, trade balance, the CPI, current account balance along with Germany’s ZEW indices and the PPI for will keep investors on their toes. Also, UK’s Parliamentary vote on Brexit, claimant count rate, the ILO unemployment rate, average earnings including bonus, the CPI, the retail price index, the PPI, the Bank of England’s (BoE) interest rate decision and retail sales would garner significant amount of investor attention.


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