Weekly Market Insight

Latest Economic & Market Update 25th August 2020

25th August 2020

Good afternoon, it is August 25th 2020 and here is your economic and market update from BlackBee. 

Today’s focus:

  • S&P500 at an all-time high.
  • US and China committed to meeting phase one trade deal.
  • House vote on post office funding for US presidential election.

Markets pushed higher yesterday thanks to signs of positive talks between the US and China regarding trade and the possibility of the Trump administration fast-tracking a Covid-19 vaccine from the UK. The S&P500 closed at a new all-time high of $3,431.28 rising 1% for the day. The Nasdaq and Dow Jones climbed 0.6% and 1.35%. In Europe, the Stoxx Europe 600 rose 1.58%. Oil climbed as two storms head towards the US with WTI climbing 0.66% to $42.62 a barrel and crude climbing 1.76% to $45.13 a barrel.

Investor concern has been growing over recent months due to the increasing tensions between the US and China. Tensions have been rising over data security concerns, Trump taking aim at China over the outbreak of coronavirus and the imposition of security laws on Hong Kong. Yesterday the office of the United States Trade Representative released a statement regarding the phase one trade deal with China where both sides were said to have seen progress and are committed to ensuring the success of the agreement. In light of more recent tensions, the statement is positive news. The terms agreed in January were that China would buy an additional $200 billion of American goods and services as the US aims to cut the trade deficit with China. Although there has been progress from China, the rate of its purchases of US goods and services will need to be accelerated as $130 billion worth will need to be bought by the end of the year to meet the agreement signed in January.  

On Saturday, Democrats in the US called for a vote where a bill was passed which would see the post office provided with $25 billion of funding to support the large increase in postal volume ahead of the US presidential election. Accompanying the funding was blocks on cost-cutting measures and the requirement to prioritise election-related mail. Despite Donald Trump’s arguments against the postal voting system, claiming it is suspectable to fraud, some Republicans voted in favour of the funding for the post office. Although the bill was passed, it is unlikely that it will pass in the senate which is Republican-controlled.

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

Global Market Update
(as at close of markets 24/08/2020)