Weekly Market Insight

Latest Economic & Market Update 16th September 2020

16th September 2020

Good afternoon, it is September 16th 2020 and here is your economic and market update from BlackBee. 

Today’s focus:

  • Positive retail and industrial figures emerge from China
  • European stocks hopeful on back of H&M’s Q3 profit report forecast announcement
  • Investors await Fed policy decision

Tuesday’s release of China’s retail and industrial production figures was a well-received good news story for the market. For the first time in 2020, and since the pandemic gripped the country, Chinese retail sales grew 0.5% in August when compared to the same month in 2019. Although retail sales for 2020 are down 8.6%, this a positive step forward in consumer confidence as spenders look to adapt to the “new normal”. Further economic progress is evident in industrial production figures that were also released yesterday. Industrial production in China for August 2020 was up 5.6% when compared to August 2019. 2020 industrial production growth so far is up 0.4%. Chinese property investment is up 4.6% year on year. As Europe and the US sit a few phases back in the Covid-19 economic recovery cycle, China’s positive August figures will be welcomed by governments, policymakers and businesses. Both on-shore and off-shore traded Chinese renminbi strengthened 0.3% (Source: FT/Bloomberg)

On Tuesday, the S&P 500 rose 0.52% while the NASDAQ gained 1.21%. NASDAQ gains were driven by Tesla Inc (+7.18%), Apple Inc (+0.16%) and Nvidia Corp (+0.92%). The Euro Stoxx 50 was up 0.47% for the day (Source: Bloomberg). H&M shares rose 10.79% having announced a Q3 forecast pre-tax profit of about 2 billion Swedish Krona (c. $230 million), beating analysts’ forecasts. H&M is the world’s second-biggest fashion retailer. While this pre-tax profit is weaker than the same period in 2019 (c. 5 billion Swedish Krona/ c. $673 million), it is a significant improvement from 2020 Q2’s pre-tax loss of (c. 6.5 billion Swedish Krona/ c. $741 million). By the end of August, about 200 of H&M’s 5,000 stores were still closed due to coronavirus, down from 900 at the beginning of June and 4,000 in April. H&M’s expected growth could be interpreted as shadowing the above-mentioned growth in Chinese retail sales and likely growing consumer confidence as Europe and the US emerge from Q2’s lockdowns.

US Futures and European equities are mixed at the time of writing on Wednesday as investors await today’s Federal Open Market Committee policy decision from Chair Jerome Powell. This will be the last FOMC meeting before November’s Presidential elections.

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

Global Market Update
(as at close of markets 15/09/2020)