Weekly Market Review - September 9-13
As of late Friday, the US and European stock markets rose over the week, driven by optimism around the Sino-US trade conflict and hopes for Brexit talks. Besides, the fears of a global economic recession are easing.
In the US, the S&P 500 increased by 1% while NASDAQ rose 0.8%. Apple rose 4.6% over the week after launching its new iPhone 11 family.
The yields on the US 10-year Treasuries increased 30 basis points to 1.86%.
In the commodity market, the price of a barrel of WTI crude oil declined by $0.40 to $55.10. Gold and silver tumbled by over 1.2% each.
US-China Interim Deal on The Horizon
The US and China might reach a temporary trade deal, according to rumours from both sides. The potential interim agreement would leave more difficult issues untouched for a while. This week, both governments showed signs of compromise. China ceased tariffs for a year on several goods from the US, including pork, soybeans, and cancer drugs, among others. On the other side, the US delayed a tariff increase planned for October 1 by about two weeks to avoid the overlap with the 70th anniversary of the People’s Republic of China.
ECB Adopts Package of Easing Measures
This week, the European Central Bank (ECB) presented its plan for an aggressive easing to boost the economy. Thus, the bank will press its deposit rates into the negative area, to -0.50%. The terms of cheap loans to banks will also be updated. The ECB will restart asset purchases at a rate of 20 billion euro per month for an undefined period. ECB President Mario Draghi, who will soon leave his position for Christine Lagarde, encouraged local governments to support the European economy through fiscal policy.
Canadian PM Calls For General Election
Canadian Prime Minister Justin Trudeau called for a general election and dissolved the parliament this week. The election, scheduled for October 21, will be tight, with the current polls suggesting that the Conservative Party gets very close to Trudeau's Liberal Party, with 30% each. Trudeau is praised abroad for his progressive approach, but he encounters difficulties at home. The Prime Minister is in the midst of a scandal as he was charged with violating ethics rules by supporting a large company in a judicial matter.
US Retail Sales Exceed Expectations
US retail sales beat analysts’ expectations last month, driven by auto sales and online shopping. The indicator pushed the Treasury yields higher and gave hopes that consumers will support an economy hit by the trade war with China. On Friday, the Commerce Department said that retail sales rose 0.4% in monthly terms, after July’s upwardly revised growth of 0.8%. Analysts polled by Bloomberg anticipated a 0.2% increase. Sales in the control group (Retail Control), which exclude food services, gasoline stations, auto dealers, and construction materials stores, rose 0.3% over the month, in line with forecasts.
US Budget Deficit Hits $1 Trillion Mark
The US government reported a $200 billion budget deficit last month, suggesting that the fiscal year-to-date (YTD) deficit exceeded the $1 trillion mark. Analysts surveyed by Reuters anticipated a $195 deficit for August. On Thursday, the Treasury Department said that federal spending last month was $428 billion, down 1% from the same period last year. On the other side, receipts were $228 million, up 4% year-on-year. The deficit for the fiscal YTD was $1.067 trillion, up from $898 billion in the same period in 2018.
German Economy Not Facing a Recession
The German economy is not heading for an obvious recession after slightly contracting in the second quarter of this year. However, there are no signs of a rebound either. This is the conclusion of the country’s Economy Ministry. In the three months through June, Europe’s largest economy contracted by 0.1% compared to the previous quarter, supporting concerns that the economy is falling into a recession. Economists agree that a recession refers to at least two negative quarters in a row. However, the ministry said that the economy wasn’t going through a weak phase.
Upcoming News to Watch
On Monday, China will release several economic updates, including data on industrial production, retail sales, and investment. Elsewhere, Australia will present its meeting minutes.
On Tuesday, the US will report on its industrial production while Japan will release imports, exports, and trade balance data.
On Wednesday, the UK will publish inflation data. In the US, the Federal Reserve’s Federal Open Market Committee (FOMC) will meet to decide its interest rate.
On Thursday, the Bank of Japan and the Bank of England will also meet to decide the interest rate.
The week will end with Canada’s retail sales data.
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.