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Daily Market Update

Latest Economic & Market Update 22nd September 2020

Good afternoon, it is September 22nd 2020 and here is your economic and market update from BlackBee. 

Today’s focus:

  • Risk-off market with renewed restriction worries
  • Banking stocks tumble following leaked FinCEN (US Financial Crimes Enforcement Network) files
  • Oil prices down with expected Libyan supply increases

Equities retreated yesterday in response to increases in Covid-19 case numbers across Europe and the possible ensuing restrictions.The S&P 500 was down 1.16%, the fourth consecutive day of losses following the FOMC policy decision to keep target rates between 0% and 0.25%. The Dow Jones Industrial Average was 1.84% lower than the previous day. 10-year US Treasury Yields tightened 3 basis points.

Banking shareholders had the added misery of being blindsided by the release of the FinCEN Files on Sunday. International Consortium of Investigative Journalists article titled “Global banks defy U.S. crackdowns by serving oligarchs, criminals and terrorists” name-checked several of the world’s largest banks of allegedly dealing with clients involved in illegal business activities. The leaked documents, involving about $2tn of transactions, have revealed how some of the world’s biggest banks have reportedly allowed criminals to move dirty money around the world. Barclays lost 5.40% while HSBC’s London listed shares were 5.26% lower at the close. The MSCI World Bank Index retreated 3.49%. The index is composed of large and mid-cap stocks across 23 Developed Markets countries. All securities in the index are classified in the Banks industry group (Sources: International Consortium of Investigative Journalists, Bloomberg, MSCI)

Both crude oil benchmarks suffered losses in Monday’s trading. Near-dated future contracts in WTI (West Texas Intermediate) retreated $1.80 to $39.31 per barrel (-4.38%) while front-month Brent Crude futures dipped $1.71 to $41.44 per barrel (-3.96%). With demand uncertainty due to fears of Covid-19 restrictions reducing consumption, reports that Libyan oil supplies will return to the market after an 8-month block deal was a fresh blow to prices. OPEC+ are now faced with this added factor when the group attempts to determine its optimal output levels. During the Russia-Saudi Arabia price war in March and April of this year, Brent near-dated futures bottomed out at $30.54 per barrel. Following agreement between the two countries on supply cuts in April, in addition to the increase in industrial activity post-Q2 lockdowns, Brent active futures contract reached $46.29 per barrel on August 25th. Prices are still some way below pre-pandemic levels. On 3rd January, future prices for the upcoming maturity were $63.53

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

Global Market Update
(as at close of markets 21/09/2020)