Weekly Market Insight

Latest Economic & Market Update 29th July 2020

29th July 2020

Good afternoon, it is July 29th 2020 and here is your economic and market update from BlackBee. 

Today’s focus:

  • Lower than expected earnings results push stocks lower.
  • Fed extends emergency lending facility.
  • ECB tells lenders to wait until at least January to pay out dividends.

Gold continued to climb yesterday, briefly touching $1,977 before pulling back on some of its gains and closing 0.8% higher at $1,958.43. Bonds rose and US stocks fell as earnings reports from major companies in the US showed worse than expected results. The S&P500 closed -0.65% lower.

Emergency lending facilities set up by the Federal Reserve, due to expire at the end of September, have been extended for a further three months. The facility offers loans to medium-sized businesses and also supports corporate debt markets. The extension will provide further support as the growing number of coronavirus cases continues to weigh on the US economy. The facility was extended as policymakers do not want to end the facility prematurely which could ultimately hurt economic recovery. Central Bank stimulus in the US and Europe has been vital so far during the pandemic by supporting markets and boosting investor confidence.   

In an attempt to ensure lenders across the Eurozone will be able to sustain loan losses and continue lending, the ECB has told lenders to wait until January at the earliest to pay out dividends and be “extremely moderate” regarding staff bonuses. In a time of high uncertainty, the ECB is trying to ensure that banks focus on capital resources as many loans may sour due to the recession facing the Eurozone and the ability of banks to continue to provide credit will be vital for supporting the economy. As of close yesterday, the Euro Stoxx Banking Index was down 37% since February.

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

Global Market Update
(as at close of markets 28/07/2020)