Weekly Market Insight

Latest Economic & Market Update 26th August 2020

26th August 2020

Good afternoon, it is August 26th 2020 and here is your economic and market update from BlackBee. 

Today’s focus:

  • US stocks continue to hit new highs.
  • Research from Cushman & Wakefield on US office sector.
  • Highest recorded percent of UK retailers reporting job cuts.

The S&P500 and Nasdaq continued to climb into all-time highs as the S&P500 rose 0.36% to $3,443.62 and the Nasdaq climbed 0.762% to $11,466.47. The Dow Jones declined -0.21%. Treasury yields rose with the 10-Year US Treasury yield climbing to 0.68%. In Europe, the Stoxx Europe 600 fell -0.3%. As Storm Laura continues to approach the US, expected to strengthen into a hurricane, the prices of oil and gas continue to increase. WTI climbed 1.71% to $43.35 a barrel, crude oil climbed 1.62% to $45.86 a barrel and gas futures climbed 2.11%.

Research from Cushman & Wakefield analysing the impacts of Covid-19 and cyclical effects on the US office sector showed that office vacancy will increase from 13% in 2019 to 18% in mid-2022, with office rents declining as a result of lower demand. On a positive note, their second finding is that the office sector will recover and demand for office space will turn positive in H2 2022. Although the shift to work-from-home is a major factor in this pandemic, which may delay recovery, a structural transformation to a professional services-oriented economy was noted as a long-existing trend and one-quarter of all jobs are expected to be office-based in the next 10 years. Despite the structural shift of some companies moving to work-from-home, businesses will need office space for some of their employees and the office environment provides a range of benefits such as company culture and knowledge spillover that will be an influential factor in the recovery of the office sector.  

As the pandemic took hold in March, online retailers began to benefit with lockdown measures in place while retailers who had no online presence suffered as income dried up. The Centre for Retail Research shows that as of the 5th August, 49 companies in the UK were failing, affecting 3,140 stores. Prior to the crisis, there was already concern growing over the survival of retail stores due to the shift towards online shopping. According to a survey from the CBI employers group, two-thirds of retailers in the UK reported job cuts in the month of August. It is the largest percentage of retailers to report job cuts since records began in 1983. Lower levels of sales were also reported, showing falling demand from retailers despite the reopening of the economy.

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

Global Market Update
(as at close of markets 25/08/2020)