Weekly Market Review - September 2-6
As of late Friday, global stock markets bounced back this week as risk appetite among investors increased due to more optimism around the US-China trade war. Chinese representatives said that the government led by the communist party was seeking to calm down the trade tension.
Besides, tensions in Hong Kong reduced while Boris Johnson’s intention for a no-deal Brexit was temporarily blocked.
In the US, S&P 500 rose 1.79%, and the Nasdaq gained 1.76% over the week, which are among the best weekly performances this year.
The US 10-year Treasury note rose to 1.56% from 1.52% last week.
In the commodity market, the price of a barrel of WTI crude oil declined to $55.50. Gold and silver fell about 1% as trade tensions eased.
Elsewhere, Bitcoin rose over 8% since last Monday. Investors are welcoming news that crypto exchanges Bitfinex and Binance are launching futures trading products and platforms while Bakkt, a Bitcoin futures trading platform backed by NYSE parent ICE, is about to go live by the end of September.
Risk For No-Deal Brexit Declines
The UK Parliament is losing control of the Brexit deadline, as the House of Commons passed a bill that mandates Prime Minister Boris Johnson to ask the EU to extend the Article 50 until January 31 if a deal is reached before October 19. The current Brexit deadline is October 31. 21 members of the Conservative Party voted for the postponing. In reaction, Johnson expelled them from the party, thus losing the parliamentary majority. The PM called for a new election but the parliament counteracted his intentions. All in all, the risk for a no-deal Brexit is reduced, but a general election might be on the horizon.
US-China Trade Talks Confirmed For October
The US-China trade conflict continues to be in the spotlight. The good news is that there are some signs of conciliation, as Chinese representatives hinted that the government wanted to solve the tensions in a calm manner. Chinese negotiators said that ministers of the two countries would talk in the coming weeks ahead of face-to-face negotiations between trade officials planned for October in Washington. While the markets reacted positively on the news, the new tariffs active since September 1 are maintaining the pressure.
American Factory Sector Declines For First Time in 3 Years
The US manufacturing sector contracted last month for the first time in about three years. The market faces serious challenges amid the trade conflict between the US and China and fears of a global economic recession. The Institute for Supply Management (ISM) said on Tuesday that the US factory activity fell to 49.1, the lowest reading since January 2016. Analysts surveyed by Reuters expected a slight decrease to 51.1 for August. In July, the indicator stood at 51.2
Eurozone’s Retail Trade in Line With Expectations
Retail sales in the eurozone declined in line with forecasts in July, dragged down by clothing sales. On Wednesday, European statistics agency Eurostat announced that retail sales in the eurozone’s 19 countries fell 0.6% in July after a 1.2% drop in June. Trade of textiles, clothing, and footwear tumbled 3.2% was the worst-performing component of the indicator. However, sales of foods, medicines, electrical products, furniture, and online orders also declined. The biggest drops in retail sales came from Germany and Belgium.
Bank of Canada Leaves Rates Unchanged
The Bank of Canada maintained its interest rates unchanged during a Wednesday meeting. This represents the seventh no-change decision in a row. More importantly, the bank hinted that it wasn’t ready for an immediate need for a rate cut despite the general promotion of aggressive easing, especially by the European Central Bank and the Federal Reserve. The economic growth in Canada has beaten expectations while inflation is on target.
American Private Sector Adds 195,000 Jobs in August
The payrolls in the US private sector expanded at the fastest pace since April, driven by considerable job increase in the services sector. On Wednesday the ADP’s National Employment Report stated that 195,000 private-sector jobs were added in August. Analysts polled by Reuters expected a figure at 149,000. The private payroll growth in July was revised downward to reflect gains of 142,000 against the initially reported 156,000. The services sector added 184,000 new jobs, also the largest growth in four months.
Upcoming News to Watch
Markets will be closed in India on Tuesday in observance of the Moharram holiday. South Korean markets will be off on Thursday and Friday on Chusok – the Full Moon Festival. Chinese markets will also be closed on Friday on the Mid-Autumn Festival.
This Sunday, Japan will report its GDP data for the second quarter while China will release imports and exports data. The UK will also report on its economic growth on Monday.
The European Central Bank (ECB) will meet to decide its interest rate and the monetary policy. President Mario Draghi will hold speech during the ECB’s press conference.
Anatol has been writing for our news site for a year and is the newest member of our team. While he’s new to us, he’s certainly not new to trading with over 10 years’ experience being a professional financial journalist and working in the markets. Learn more.