Weekly Market Insight

Latest Economic & Market Update 18th September 2020

18th September 2020

Good afternoon, it is September 18th 2020 and here is your economic and market update from BlackBee. 

Today’s focus:

  • Equities slide following Federal Open Market Committee press conference
  • BoE keeps rates unchanged and discusses negative rates

After Wednesday’s FOMC policy decision to keep rates in the 0 to 0.25% range until at least 2023, US equities market had an initial upswing. However, in Fed Chairman Jerome’s Powell ensuing press conference, his failure to mention further quantitate easing, and lack of confidence in continued economic recovery rates dampened investor’s enthusiasm. This downbeat sentiment continued into Thursday’s equities trading globally. Nikkei 225 was down 0.51%, Stoxx Europe 600 Index decreased 0.5% while in the US the S&P 500 retreated 0.75% and the NASDAQ Composite Index was 1.08% lower than the previous day. Tech shares were the primary drivers of the retreats in the US, continuing their recent volatility. US Treasury Yields were purchased with the yields in both the 10 and 30-year maturities tightening (1 and 3 basis points respectively). In such uncertain times, investors are looking from assurances and confidence signals from policymakers. Chairman Powell did not quite inject the desired confidence into the market on Wednesday. (Source: Bloomberg)

As expected, the Bank of England held interest rates at 0.1% in its policy decision announcement yesterday. With the twin threat of a second coronavirus wave and a No Deal Brexit, the BoE’s strategy is a particularly delicate one. The BOE said its Monetary Policy Committee had been briefed on how a negative Bank Rate “could be implemented effectively, should the outlook for inflation and output warrant it at some point during this period of low equilibrium rates”. Sterling fell sharply after the announcement, weakening by around 0.6% on the day against the U.S. dollar, with GBP trading below $1.29. On Wednesday Chancellor Rishi Sunak stated that he will close the UK’s furlough scheme at the end of October and find “creative” ways to help keep people in jobs (Source: Reuters, FT)

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

Global Market Update
(as at close of markets 17/09/2020)