Weekly Market Insight

Latest Economic & Market Update 3rd September 2020

03rd September 2020

Good afternoon, it is September 3rd 2020 and here is your economic and market update from BlackBee. 

Today’s focus:

  • Dow Jones crosses $29,000 level.
  • Federal Reserve Beige Book Report released.
  • Eurozone faces increased challenges to economic recovery.

The Dow Jones crossed above $29,000 for the first time since February, with the average climbing 1.59% yesterday. The YTD return for the Dow Jones now stands at 1.97% with all three major indices in the US now having positive YTD returns. The S&P500 climbed 1.54% and the Nasdaq rose 0.98% as US stocks continued their strong rally. The Bloomberg Dollar spot index rose 0.55%. The Stoxx Europe 600 climbed 1.66%. Gold fell 1.38%.

The Federal Reserve’s Beige Book Report released yesterday, which gives insight into current economic conditions across the US, showed that there have been modest gains in economic activity in most districts, however economic activity remains well below pre-pandemic levels. According to the report, there was a continuous theme of uncertainty and volatility affecting consumer and business activity across the 12 districts. Slow job growth was also reported with hiring volatility as some workers were laid off permanently due to softening demand.

Policymakers in the Eurozone face several challenges to sustain economic recovery. There have been signs that recovery in the Eurozone is slowing with the rise in the number of Covid-19 cases. The Markit Services PMI for August showed that the services sector saw only a slight improvement in activity following a big jump in July. Deflation concerns are also present following an inflation reading of -0.2% for August. Another concern now for the ECB is the strength of the euro. The Bloomberg Euro Index, which measures the performance of the euro against other major currencies, show that it has increased by 8.4% since the end of February when the pandemic took hold of markets. A strengthening euro makes exports less attractive and adds further downward pressure on prices which will negatively impact economic recovery.

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

Global Market Update
(as at close of markets 02/09/2020)