Weekly Market Insight

Latest Economic & Market Update 7th September 2020

07th September 2020

Good afternoon, it is September 7th 2020 and here is your economic and market update from BlackBee. 

Today’s focus:

  • Tech stocks lead major indices lower again.
  • Fresh round of unemployment stimulus less likely.
  • BoE says the summer surge in economic activity in the UK will not last. 

The three major indices in the US continued their decline on Friday driven by a fall in major tech shares. The Nasdaq closed -1.27% lower while the S&P500 and Dow Jones fell -0.81% and -0.56%. US treasuries fell with the 10-Year Treasury Yield climbing 8 basis points to 0.71%. Oil fell below $40 a barrel as the WTI declined -3.9% to $39.77 a barrel. It is the first time since June that the price has fallen below $40 a barrel. The Stoxx Europe 600 fell -1.13% on Friday to 361.93. Source: Bloomberg 

In August, 1.4 million jobs were added in the US bringing the unemployment level down to 8.4% from 10.2% in July. At its highest point during the pandemic, unemployment hit 14.7% in April. When the economy began to reopen and job number initially started picking up there was a battle in Congress over whether to extend the unemployment payments of $600 a week. Democrats were looking to extend it to further support the economy, while Republicans felt the payment was deterring employment. With a deal still not reached and unemployment falling, an agreement on a fresh round of unemployment stimulus is becoming less likely. Although the drop in unemployment is positive, it is still worth noting what the Fed’s beige book report noted last week that hiring is volatile and job growth is slow.  

Like most other countries, the UK experienced a bounce-back in economic activity following the easing of restrictions as consumers began to spend again. Following a summer surge in consumer activity in the UK, where some figures such as retail spending showed stronger spending in comparison to the same period in the previous year, the Bank of England have warned that this level of economic activity is unlikely to last. They also warned that economic recovery would be slower than their forecasts released in August. Government wage subsidies and tax deferrals are set to end shortly which could see a rise in unemployment figures for the UK and with Covid-19 rates still persistent, some business activities will not yet to be able to return.

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

Global Market Update
(as at close of markets 04/09/2020)