Weekly Market Insight

Latest Economic & Market Update 4th September 2020

04th September 2020

Good afternoon, it is September 4th 2020 and here is your economic and market update from BlackBee. 

Today’s focus:

  • Graph of the Week: Warning signs were there for Sell-Off

Graph of the Week: Warning signs were there for Sell-Off

As of close Wednesday, the Nasdaq Composite Index was up nearly 76% from lows in March. Investors have been cautious as to how sustainable the rally in equity markets have been and as of late had been questioning the rise in volatility – a fear gauge for equities. The relationship between the VIX and equity markets has been dislocated as volatility has been climbing despite markets continuing their rally. Typically, when equities are rising, volatility falls. Explanations for the dislocated relationship include investors buying protection in derivative markets as they grow increasingly cautious about the rally. The Cboe NDX Volatility Index reflects the market’s expectation of future volatility using implied volatility from options. Since late August, this has also been climbing despite the Nasdaq consistently delivering positive daily returns. Following the shift to a work from home environment, tech stocks are viewed as a safer bet in the world of equities however the fear gauge between the S&P500 and Nasdaq has stretched to high levels suggesting greater investor concern over the tech stock rally. Yesterday the growing questions over the rise in volatility measures were answered in markets as US stocks suffered the biggest sell-off in four months. The Nasdaq suffered the biggest declines as the index fell -4.96%.

  • Jobless claims in the US fell to 881,000 last week, the lowest level since the pandemic took hold in March.
  • US stocks fell sharply on Thursday with the Nasdaq tumbling -4.96%, the S&P500 declining -3.51% and the Dow Jones falling -2.78%.
  • The US trade deficit grew 18.9% month on month in July to reach the highest deficit since 2008.

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

Global Market Update
(as at close of markets 03/09/2020)