Weekly Market Insight

Latest Economic & Market Update 13th August 2020

13th August 2020

Good afternoon, it is August 13th 2020 and here is your economic and market update from BlackBee. 

Today’s focus:

  • S&P500 nearing all-time high.
  • Eurozone industrial production increases less than consensus estimates.
  • Fed officials state lack of control over coronavirus in the US has slowed down economic recovery.

The S&P500 briefly broke its high of $3,386.15 reached in February, before paring some of its gains and closing up 1.4% at $3,380.35. The Nasdaq also had a strong day with the index closing 2.13% higher led by Apple, Microsoft and Tesla. The 10-year Treasury yields rose to a 5-week high of 0.66%. Yields rose for the day but following the US Treasury auctioning off a record $38 billion of new 10-year notes, which attracted more investors than expected, yields on 10-year notes pulled back slightly. Following three consecutive days of declines, where the spot price of gold fell 7.3% to $1,911.89 after breaking the $2,000 level, Gold rebounded slightly increasing 0.2% to $1,915.83.

Figures released from Eurostat yesterday showed that industrial production in the Eurozone increased by 9.1% in June. In May, industrial production rose by 12.4%. Although the data shows that the Eurozone economy is bouncing back from the pandemic, June’s figure came in lower than consensus estimates. The level of industrial production stands over 12.3% lower than the same period last year, highlighting the long way to go to get production back to pre-pandemic levels. The question remains whether an increase in industrial production is sustainable as an initial rebound would have been expected due to built-up demand and there is a high level of uncertainty regarding the global economic recovery.

The failure to control the course of the pandemic in the US has hampered the economic recovery according to two Fed officials. President of the Federal Reserve of Boston, Eric Rosengren, said that the failure in controlling the virus will prolong economic recovery and may also impact people’s appetite to go out and resume normal activities as they could be fearing for their health. Using high-frequency economic data they have noticed a slowdown and are concerned that this may lead to some temporary layoffs becoming permanent. President of the Federal Reserve of Dallas, Robert Kaplan, also raised similar concerns stating that the increase in coronavirus cases has muted the rebound. Both Fed officials were comparing economic data in the US to other advanced economies and are lamenting that the lack of control over the spread of coronavirus has affected economic recovery.

Best & Worst Performers of Large Cap US Stocks on Wednesday
Click the image to enlarge

Global Market Update
(as at close of markets 12/08/2020)