Weekly Market Insight

Latest Economic & Market Update 6th August 2020

06th August 2020

Good afternoon, it is August 6th 2020 and here is your economic and market update from BlackBee. 

Today’s focus:

  • Progress in stimulus negotiations push stocks higher.
  • ADP reports a sharp slowdown in private payroll growth.
  • Eurozone retail sales at pre-crisis levels.

Fresh news regarding a potential vaccine and investors hopes of a new round of stimulus, as negotiations were said to have made progress, pushed US stocks higher on Wednesday. The S&P500 recorded an increase for the fourth consecutive day. The index closed at $3,327.77 and is only 1.7% off an all-time high of $3,386.15 that was reached in February. Gold remained above the $2,000 level and continued to climb increasing 0.9% for the day. Following positive economic data in Europe, the Stoxx Europe climbed 0.49%.

An ADP report on private payrolls in the US released yesterday came in far below the consensus Wall Street estimate. The report showed an increase in private payrolls of 167,000 in July. The Wall Street estimate was 1 million. The sharp slow down in job growth reinforces concerns that the uptick in coronavirus cases would slow economic recovery. In June, private payrolls increased by 4.314 million. However, it should be noted that the revision of this figure could change dramatically. In May, a growth of 2.76 million was initially reported and revised up to 3.06 million. In June, an increase of 2.369 million was reported before being sharply revised upwards to 4.314 million. Although this latest figure could be revised upwards, it is still a sharp slowdown in job growth in comparison to June. The slowdown in the growth is consistent with data released that showed the number of new unemployment claims has also climbed consecutively for the last two weeks.

Figures released yesterday from Eurostat showed that in June, the volume of retail sales across the Eurozone increased to pre-crisis levels. The volume of sales increased by 5.7% month on month. In May, the volume of retail sales sharply increased by 20.3% month on month. Online shopping has accounted for the majority of sales in the past few months as a result of lockdown, however, with economies reopening a slight shift has been seen as shoppers return to retail stores. With concerns over levels of employment and the possible resurgence of coronavirus cases, questions remain over whether the level of spending will be sustained. The sharp pickup in retail sales in the last two months could be attributed to stimulus that has provided income to households and also built up demand as a result of lockdown.

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

Global Market Update
(as at close of markets 05/08/2020)