Analytics, 19 September 2020
Week 38 in Brief
How did the major indices perform?
U.S. stocks closed lower, notching a third straight weekly loss, dragged by shares of tech companies as investors searched for new catalysts to give direction to global markets as they digested outcomes of central bank meetings in the US and UK.
- Friday’s trading action marked quadruple witching, the simultaneous expiration of single-stock options, single-stock futures, and stock-index options and stock-index futures, which has traditionally been associated with some intraday volatility.
- The Dow Jones Industrial Average closed at 27,657.42, down 244.56 points or 0.9%; the S&P 500 shed 37.54 points, or 1.1%, to close at 3,319.47; while the Nasdaq Composite fell 116.99 points, 1.1%, to close at 10,793.28.
- For the week, the Dow lost less than 0.1%, the S&P 500 was down 0.6%, and the Nasdaq fell 0.6%.
- The Dow is down 2.72% for the month-to-date, the S&P500 down 5.17%, and Nasdaq Composite down 8.34%.
- Investors continue to look for progress on fiscal stimulus talks in Washington which many consider crucial to underpin the economic recovery from the coronavirus pandemic and sustain the stock market’s gains.
Economic data & policy
- The University of Michigan said the preliminary reading of its U.S. consumer sentiment index in September was 78.9, up from 74.1 in the prior month, better than economists’ expectations of 75.9.
- The U.S. current-account deficit, a measure of the nation’s debt to other countries, widened sharply in the second quarter. The current-account deficit widened to $170 billion from a revised $111.5 billion.
- The central bank’s policy update on Wednesday marked its first since it outlined its average-inflation target strategy to avoid falling into the quicksand of low inflation by keeping interest rates close to 0% until the labor market achieves maximum employment and inflation has risen to its 2% target “and is on track to moderately exceed 2% for some time.”
Stocks in focus
- Oracle shares slipped 0.7% amid recent developments surrounding its proposed acquisition of TikTok. President Trump said on Wednesday that he wasn’t prepared to sign off on a deal that could see China’s ByteDance retain majority ownership in the app. Oracle closed trading at $ 59.75.
- Nikola stock came under more fire from short-seller Hindenburg Research, whose claims have triggered a Securities and Exchange Commission investigation on Nikola. Nikola closed trading at $34.19, after dropping 8.3% to $30.35 on Wednesday.
European markets finished broadly lower on Friday, with travel, banking and auto shares leading declines as a resurgence in coronavirus cases across the continent rekindled fears about the pandemic’s impact on a nascent economic recovery.
- Shares in France led the region with the CAC 40 down 1.22% while London’s FTSE 100 is off 0.71% and Germany’s DAX is lower by 0.70%.
- The Stoxx Europe 600 Index lost 0.7% to close at 368.78, while the U.K.’s benchmark FTSE 100 ended trading at 6,007.05, also 0.7% lower. The STOXX 600 still eked out a 0.2% weekly gain supported by earnings major retail companies.
- Travel and leisure were the worst-performing sectors, down 3.5%.
- The banking index.SX7P fell 2.6%, hitting its lowest level since May 26 and on course for record-lows as major central banks pledged to keep interest rates lower for a long time, with the Bank of England looking at taking borrowing costs to sub-zero levels if needed.
- Separately, Sweden’s financial watchdog said it was investigating Swedbank for potential market abuse.
Asian markets finished broadly higher on Friday with shares in China leading the region.
- In China, the Shanghai Composite is up 2.07% while in Hong Kong the Hang Seng Index closed 0.5% higher.
- In Japan, the Nikkei 225 is up 0.18%; South Korea’s Kospi added 0.2% while Australia’s S&P/ASX 200 was little changed.
Commodities and other assets
- Oil had its best week since June, registering a weekly gain of about 9% after Saudi Arabia defended market recovery. U.S. benchmark WTI closed at $41.01 a barrel while international benchmark Brent crude closed at $43.37 a barrel.
- Gold futures finished on Friday to tally a second weekly gain in a row, with December gold rising $12.20, or 0.6%, to settle at $1,962.10 an ounce, following a 1.1% slide on Thursday.
- Meanwhile, December silver added 3 cents, or 0.1% to finish at $27.129 an ounce, following a 1.4% drop in the previous session.
- For the week, gold notched a weekly gain of 0.7%, following a similar climb the week before, and silver futures saw a 1% advance from last Friday’s settlement, according to FactSet data.
- The US 10-year Treasury note rose 1.2 basis points to 0.694%, contributing to a 2.6 basis point increase this week while the 2-year note rate was up 0.6 basis point to 0.139%, adding to a single basis point weekly rise.
Currencies
- The USDJPY fel for the fifth straight day while GBP dipped on Covid-19 worries. The USD costs 104.83 Japanese yen, down from 104.63 yen Thursday.
- The dollar was flat on the day against a basket of currencies, though it showed a weekly decline after two weeks of gains.
- While strong British consumer spending had helped GBP earlier, it was last down 0.33% at $1.2929.
- While the euro was virtually unchanged against the dollar at $1.1851, it was down for its fourth day out of five against JPY, last trading at 123.90 yen.
Next week
- Earnings reports from Nike, Autozone, General Mills, and more stocks; and Oracle-Walmart bid for TikTok.
- Watch out for our Monday Weekly Market Outlook that provides insights on what’s coming up that week.