Weekly Market Insight

Latest Economic & Market Update 24th July 2020

24th July 2020

Good afternoon, it is July 24th 2020 and here is your economic and market update from BlackBee. 

Today’s focus:

  • German stocks recover from Covid-19 effects
  • US equity fund outflows rise above $20bn

Germany’s DAX index turned briefly positive for the year this week, a rare occurrence among European stock indices, which failed to return to where they started pre Covid-19. The index of 30 German blue-chip bonds closed negative YTD on Thursday, however, its rally over the past few months has brought it to 1.1% lower than where it ended in 2019. This makes it Europe’s best-performing equity market. In contrast, the Stoxx 600 is down 10% YTD, while the UK FTSE 100 has dropped 18%. The DAX is a total return index which assumes dividends are re-invested, however, including an adjustment for this factor, German equities have still outperformed it. The MSCI Germany has outpaced its pan-European equivalent as well as the Stoxx 600. The consumer sector is DAX’s largest at 17% of its market value, larger than the 14% consumer share of the blue-chip index.
Source: Financial Times.

Wednesday saw US equity withdrawal from funds reach more than $20bn for 2020, displaying investor’s caution over re-entering the market. There were $3.2bn redemptions from mutual funds and exchange-traded funds over the past 7 days, bringing re-investment figures back into the stock market to $17bn. This is a third of funds withdrawn between February and March. The rapid exit from US stocks means many investors have missed much of the rally that added 45% to the value of the S&P 500 since late March. Investors caution has increased the need for safer parts of the fixed income market. US investment-grade corporate bond funds have had a huge inflow this week of $1.6 bn, pushing the amount of new money invested into the fund to $50bn this year. Corporate bond yields have dropped to an all-time low (dropping 2% for the first time) however the demand for credit looks strong. Following outflows in March and April of this year, inflows to credit funds have elevated despite declining yields.
Source: Financial Times.

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

Global Market Update
(as at close of markets 23/07/2020)