Weekly Market Insight

Latest Economic & Market Update 24th September 2020

24th September 2020

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

Today’s focus:

  • US Equities down as Fed stresses the importance of fiscal support to Congress
  • European recovery rate stalling according to Purchases Manager Index releases

Fed Chairman Jerome Powell and other US Central bankers reiterated the need, in their view, for Congress to approve another fiscal stimulus package. Last week Powell was unable to say with confidence that the US recovery rate will be maintained. Markets have been jittery since, with S&P breaking a four-day losing streak yesterday. The losses in US equities had returned yesterday with the three benchmarks; S&P 500, Dow Jones Industrial Average and NASDAQ Composite were down 2.37%, 1.92% and 3.02% respectively. European equities fared better yesterday. The EuroStoxx 50 index rose 0.51%, but European exchanges had closed by the time investors began to digest the US monetary policymakers’ statements. Richard Clarida, the Fed vice-chairman, said in an interview with Bloomberg television that “the economy is recovering robustly, but we are still in a deep hole”. The fiscal recovery package discussions between the Democrats and Republicans hit a wall and there have been no formal negotiations since last month. Politicians’ focus on the fiscal package has been diverted somewhat following the recent passing of liberal Justice Ruth Bader Ginsburg. Both parties are seeking to appoint a new Supreme Court Judge to succeed Ms. Ginsburg. The successful party’s nomination is particularly important should any dispute arise from the November election outcome. In 2000, the Supreme Courts decided George W Bush’s victory over Al Gore following a contested vote count in what turned out to be the deciding state, Florida. (Source: Bloomberg)

Eurozone economic activity slowed for the second consecutive month according to IHS Markit Purchases Manager Index (PMI) figures released yesterday. The composite index (Manufacturing and Services combined) read 50.1 for September compared to August’s 51.9. A PMI above 50 represents an expansion when compared to the previous month. There is a divergent trend in the monetary union’s economic recovery progress with manufacturing sector strengthening in contrast to the faltering services sector. Services PMI activity reached a 4 month low with the index dropping to 47.6 indicating face-to-face client service business has retreated as virus concerns increased in the last month. It was 50.5 for August and 54.7 for July. Manufacturing grew as factories saw an increase in export demand. Job losses increased in the service sector while German output was a significant contributor in the manufacturing recovery. If next month’s Composite PMI is below 50, it will show that the Eurozone has slipped back into recession. (Source: IHS Markit)

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

Global Market Update
(as at close of markets 23/09/2020)