Weekly Market Insights: 16.08 – 23.08

Weekly Market Insights

Asia - Flat

The week began with Hong Kong getting ready for more protests as anti-government demonstrators rallied peacefully on Sunday, marking a change to what have often been violent clashes. Worries over the city’s stock and property markets continue to linger even as the Hang Seng index rose 2.2% overnight following  US markets and interest rate reforms from the People’s Bank of China. Alibaba (NYSE:BABA) decided to delay its $15B Hong Kong IPO listing.

Stocks in China ended the week higher after enduring the volatility on Markets with the blue-chip CSI300 index and Shanghai Composite Index ending higher at 3,793.51 and 2,883.44 respectively. Meanwhile Markets in New Zealand and Australia edged higher on the back of the Energy, Mining and FInancial sectors with the S&P/ASX 200 index gaining 0.5% to end at 6,513.20. 

Australia’s largest airline Qantas Airways Ltd gained 3.5% as it announced a A$400 million share buyback announcement. In Japan, markets followed suite of US markets ahead of Jackson Hole with the Nikkie closing 0.02% higher.

USA - Flat

The week began with the US market rallying for the 3rd day this monday, with all 11 sectors of the S&P 500 index closing higher along with gains greater than 1% in the S&P 500, Dow, Russell 2000 and Nasdaq Composite. Worries of a severe global economic downturn were thwarted by reports citing stimulus efforts in China and Germany along with positive talks on the US-China trade frontover the weekend. The rebound on 2-year and 10-year treasury yields continued with a 6bps rise to 1.53% and 1.0% respectively.

Markets were volatile through the rest of the week with tuesday seeing the end of the 3-day rally as US Treasuries fell along with all 11 sectors of the S&P 500 with Bank stocks leading the loss. Stocks rebounded again on Wednesday on the back of strong earnings reports.

Stocks flipped between gains and losses throughout the day on Thursday before ending flat, as unsteady Treasury yields offset strong quarterly results from retailers.

In the U.S. Treasury market, 2-year and 10-year yields ended 3 bps points higher at 1.60% and 1.61%, respectively.

The main reason for volatility this week is uncertainty among investors as they await Friday’s Jackson Hole speech from Fed Chairman Powell for hints that the Fed will cut rates next month, although comments from some Fed officials on Thursday did not indicate a consensus for a cut. Gains on Thursday were led by financials (+0.6%), while materials (-0.7%), health care (-0.5%) and energy (-0.5%) drove the market down.

Europe - Flat

European shares ended higher on Monday, with  rebound on bond yields and improved global sentiment. The STOXX 600 index ended 1.2% higher, with Frankfurts GDAXI up 1.3%, recovering from last week’s six-month low. Stimulus was added by China’s central bank with the unveiling of interest rate reforms.

The resignation of Italian prime minister Giuseppe Conte on Tuesday, made investors unconfident  about Rome’s continuing lack of political stability, but also signaled that a new coalition arrangement may be in the works.

Markets closed flat on Thursday as surveys on Germany and the euro zone signaled that U.S. policymakers had not intended to start a cycle of interest rate cuts.

The biggest gainers on the STOXX on Thursday was NMC Health Plc (NMC.L), up 26%, as China’s Fosun, made an offer to buy a 40% stake.

Shares of AMBUb.CO plunged 15.2%, to the bottom of the STOXX 600, after the company issued its second profit warning in three months.

Written by

Cheryl Toh

Last updated on

August 23rd 2019, 1:49 pm

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