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Weekly Market Report

24 Aug 2020

24 August 2020


The Market Last Week

Global equities ended mostly lower last week, after the Federal Reserve’s minutes (Fed) reiterated concerns over US economic recovery.

UK Markets ended the week in negative territory, amid deadlock in post-Brexit talks.

In the UK, the consumer price index (CPI) increased to a 4-month high in July.

UK’s retail price index rose more than market expectations in July.

In the UK, retail sales rose above pre-pandemic levels in July.

In the UK, the preliminary Markit manufacturing PMI advanced more-than-expected in August.

UK’s flash Markit services PMI climbed more than market forecast in August.

In the UK, public sector net borrowing deficit unexpectedly narrowed in July.

In the UK, non-seasonally adjusted output producer price index (PPI) dropped in line with market forecast in July.

UK’s CBI balance of firms reporting total order book above normal advanced less than market consensus in August.

UK’s GfK consumer confidence index remained steady in August.

European Markets ended the week in red, amid disappointing PMI data and geopolitical tensions.

Eurozone’s final CPI advanced as initially estimated in July.

In the Eurozone, seasonally adjusted current account surplus widened in June.

Eurozone’s seasonally adjusted construction output advanced in June.

In the Eurozone, the flash consumer confidence index improved in August.

Eurozone’s flash Markit manufacturing PMI unexpectedly dropped in August.

In the Eurozone, the flash Markit services PMI dropped more than market anticipations in August.

Germany’s producer price index (PPI) dropped less-than-anticipated in July.

In Germany, the flash Markit manufacturing PMI climbed in August.

Germany’s flash Markit services PMI declined more than market consensus in August.

The European Central Bank (ECB), in its July monetary policy meeting accounts, warned that the Eurozone is likely to suffer a sharp increase in unemployment this autumn even as the economic recovery from the coronavirus pandemic takes hold. Moreover, ECB policymakers expressed uncertainty about the economic outlook and the extent to which they would have to deploy monetary stimulus.

US Markets ended the week firmer, as better-than-expected US economic data boosted investor sentiment.

US NAHB housing market index advanced in August, matching the record high set in December 1998.

US housing starts surged by the most since October 2016 in July.

In the US, building permits climbed in July.

US existing home sales jumped on a monthly basis in July, recording its highest level since December 2006.

In the US, the Markit manufacturing PMI advanced in August, recording its highest level since January 2019.

US Markit services PMI rose to its highest level since March 2019 in August.

In the US, the MBA mortgage applications fell on a weekly basis in the week ended 14 August 2020.

US seasonally adjusted number of initial jobless claims unexpectedly advanced in the week ended 14 August 2020.

In the US, the Philadelphia Fed manufacturing index dropped for the second consecutive month in August.

US NY Empire State manufacturing index dropped more than market forecast in August.

Asian Markets ended mostly lower last week, amid increasing tensions between the US and China.

In Australia, retail sales advanced on a monthly basis in July.

Australia’s Westpac leading index rose on a monthly basis in July.

In Australia, the Commonwealth Bank manufacturing PMI fell in August.

Australia’s Commonwealth Bank services PMI dropped in August.

In Japan, final industrial production advanced on a monthly basis in June.

Japan’s total merchandise trade balance unexpectedly reported a surplus in July.

In Japan, the national consumer price index CPI rose on an annual basis in July.

Japan’s Jibun Bank manufacturing PMI climbed in August.

The People’s Bank of China (PBoC), in its latest interest rate decision, kept its key interest rate unchanged at 3.85% for the fourth straight month.

The Reserve Bank of Australia (RBA), in its latest monetary policy meeting minutes, indicated that it does not see a need to further ease policy for now as its package of measures were working “broadly as expected” with an economic recovery underway in most of parts of the country. However, members agreed to continue assessing the evolving situation in Australia and did not rule out adjusting the current package if circumstances warranted.


Currency Update

The EUR ended lower against the USD last week, as dismal economic data pointed to sluggish economic recovery.
The British Pound ended stronger against the greenback last week, after Britain and the European Union (EU) resumed trade deal negotiations.
The US Dollar ended mostly stronger against its major counterparts last week, on upbeat economic data.


Fed minutes highlight sluggish economic recovery

The Federal Open Market Committee (FOMC), in its July meeting minutes, expressed concerns about the continuing impact of the coronavirus on the US economy and warned that it would continue to stunt growth and potentially pose dangers to the financial system. Meanwhile, the Fed lowered its forecast for economic growth over the rest of year and backed off from an earlier readiness to clarify their guidance on the future path of interest rates.


The Week Ahead

Going ahead this week, investors will keep a tab on the US Chicago Fed National Activity Index, the housing price index, new home sales, the consumer confidence index, durable goods orders, initial jobless claims, gross domestic product (GDP), pending home sales, personal income, personal spending and Fed chair Jerome Powell’s speech for further direction. Additionally, Eurozone’s services sentiment indicator, the consumer confidence index, the industrial confidence index, business climate index and the economic sentiment indicator along with Germany’s GDP, the Ifo indices, the GfK consumer confidence index and the CPI will keep investors on their toes. Also, UK’s Nationwide housing price index would garner significant amount of investor attention.


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