Global Markets Weekly Market Review – Week 43, 2020
Following three consecutive weekly advances, global stocks declined modestly during the week. The news flow was dominated by headlines around the negotiations for another round of fiscal relief from Washington before the U.S election, which is fast approaching is held.
The major benchmarks ended mixed, as investors reacted to stimulus negotiations while monitoring third-quarter corporate earnings reports. The technology-heavy Nasdaq Composite Index performed worst, dragged lower by weakness in bellwether Apple, while the S&P MidCap 400 and small-cap Russell 2000 indexes managed modest gains. The technology sector also fared worst within the S&P 500 Index, while communication services shares were strong, helped by gains in internet giants Facebook and Alphabet (parent company of Google), despite Tuesday’s news that the latter had become the target of a Justice Department antitrust lawsuit.
The week’s economic data seemed generally supportive, especially regarding the housing sector. Overall housing starts in September missed expectations, but single-family construction and overall building permits reached new 13-year highs. Existing home sales also surprised on the upside, jumping 9.4% in September to their highest level since May 2006. Weekly jobless claims broke a streak of negative surprises and fell more than expected to 787,000, the lowest level since March. Continuing claims also continued to fall sharply, from a revised 9.4 million to 8.4 million, although observers noted that the expiration of unemployment benefits for some workers might be partly at work.
|Index||Friday’s Close||Week’s Change||% Change YTD|
|S&P MidCap 400||2,015.59||18.26||-2.30%|
Shares in Europe fell on signs that the economic recovery was stalling amid tighter restrictions to curb surging coronavirus infections. The pan-European STOXX Europe 600 Index ended the week 1.36% lower, and major country indexes also declined: 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%, in part reflecting strength in the pound 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.
European Central Bank President Christine Lagarde said in an interview with French newspaper Le Monde that the European economic recovery risked “losing momentum” as governments imposed new restrictions to curb the coronavirus pandemic.
- Brazil – Stocks in Brazil, as measured by the Bovespa Index, returned about 3.0%. During the week, proposed legislation that would affect the central bank’s autonomy made some progress through the Senate, with a vote expected to take place on November 4. The legislation would give the central bank a primary mandate of price stability, with financial stability and promoting full employment as some secondary goals. While the central bank has had de facto independence for most of the past two decades, the central bank governor and the entire monetary policy board ultimately serve at the pleasure of the president.
- Turkey – Stocks in Turkey, as measured by the BIST-100 Index, returned about -0.2%. Shares rose in the first half of the week, as investors waited for the outcome of the central bank’s October 22 monetary policy meeting, but they surrendered all of their gains, and more, by the end of the week.
Sources: Barrons (Dow Jones & Company), Bloomberg Quint, The Economist Europe, Edward Jones Financial Reports & Trowe Price Market Insights