Company / Analytics

Week 44 in Brief

How did the major indices perform?

U.S. stocks closed the week lower, with the major indices registering their worst week since March when the market tumbled following the first wave of coronavirus. Investors continue t be worried about the uncertainty surrounding the presidential election, rising Covid-19 infections, and uncertainty about further government stimulus.

• On Friday, the Dow Jones Industrial Average 1833.97 points, or 6.5%, to 26,501.60; the S&P 500 the S&P 500 index dropped 5.6%, to 3269.96; while the Nasdaq Composite fell 5.5%, to 10,911.59.
• The S&P 500 ended the week down 5.6% and fell 2.8% for the month, while the Dow booked a 6.5% weekly fall and a 4.6% monthly drop. Friday’s decline saw the Nasdaq turn negative for the month, falling 2.3%. The index was down 5.5% for the week.
• Major technology stocks led the broad market lower on Friday as Wall Street wrapped a volatile week with steep losses. Apple, Amazon, Twitter, and Facebook all saw their shares drop after quarterly results.
• On elections, the stock markets presidential predictor, which has been successful 88% of the time since 1944, now points to but does not guarantee a Biden victory. Investors are nervous ahead of Tuesday’s presidential election - and the potential for an unclear or contested outcome – which has led to recent market volatility. Analysts believe the market is trading as if Biden is going to win.
• In vaccine news, shares of Moderna Inc. rose 8.4% Thursday after the company again reminded investors that the Phase 3 clinical trial for its COVID-19 vaccine candidate is fully enrolled as part of its third-quarter earnings announcement.

Economic Data & Policy

• U.S. GDP soared at a record 33.1% annual pace in the third quarter with the expected snapback in growth, driven by trillions of dollars in government aid to families, the unemployed, and businesses most harmed by the virus, though that assistance ended at the start of August.
• Some analysts believe the strong GDP performance gives a false impression of the economy’s true health. According to Gregory Daco, chief economist at Oxford Economics in a Thursday report, “Lest we be tempted by alluring rearview mirror economics, or confused by misleading annualized GDP figures, our weekly US Recovery Tracker points to a dangerous plateau entering Q4,”
• Weekly U.S. jobless claims fell further to a 7-month low of 751,000, suggesting layoffs are easing despite a rise in coronavirus infections. However, the pickup in job creation has slowed considerably. The Wall Street Journal reports that anecdotal evidence, from companies big and small announcing plans to lay off more workers, suggests the labor market recovery will be protracted.
• Meanwhile, a recent surge in coronavirus infections is contributing to fears the domestic and global economy could see another slowdown, undercutting the V-shaped rebound seen since the pandemic forced the near shutdown of activity around much of the world earlier this year.

Stocks in focus

• Major technology stocks led the broad market lower on Friday as Wall Street wrapped a volatile week with steep losses. Apple, Amazon, Twitter, and Facebook all saw their shares drop after quarterly results. Though the companies reported quarterly earnings that beat expectations, tepid and uncertain growth outlooks sent technology stocks tumbling.
• Shares of Tesla Inc. slid 5.55% to $388.04 Friday, on what proved to be an all-around rough trading session for the stock market. Tesla Inc. closed $114.45 short of its 52-week high ($502.49), which the company reached on September 1st.

European markets closed mostly higher Friday after better-than-expected economic data, despite worries over tightening coronavirus restrictions.

• The pan-European Stoxx 600 provisionally closed up by around 0.2% after a choppy trading session, with oil and gas shares climbing 1.9% to lead the gains.
• The CAC 40 gained 0.54%, while the DAX led the FTSE 100 lower. They fell 0.36% and 0.08% respectively.
• Eurozone GDP jumped by more than expected in the third quarter, with a quarterly climb of 12.7%, according to preliminary data from the EU statistics office on Friday. The partial rebound from the previous quarter’s pandemic-induced plunge was driven in large part by France, Italy, and Spain. Meanwhile, inflation for the bloc came in October was -0.3%, unchanged from the previous month.
• In stocks, Ubisoft shares fell over 7% after the French video game company released its first-half results.
• At the top of the European blue-chip index, Proximus climbed 8% after the Belgian telecoms company beat third-quarter profit expectations and upgraded its guidance.

Asian markets finished sharply lower on Friday with shares in Hong Kong leading the region.

• The Hang Seng is down 2.09% while Japan’s Nikkei 225 is off 1.52% and China’s Shanghai Composite is lower by 1.47%.
• Ant Group’s highly anticipated initial public offering, set to be the biggest ever, attracted $3 trillion in retail bids for its soon-to-be-listed shares. Ant Group which is controlled by Alibaba founder Jack Ma will raise more than $34 billion in what is likely the world’s largest IPO, in a deal that is already oversubscribed. Ant Group IPO shares will list jointly on both the Hong Kong Stock Exchange and the Shanghai Stock Exchange. Shares on the Hong Kong Stock Exchange will be priced at HK$80 ($10.32), and shares on Shanghai’s tech-oriented STAR Market exchange at 68.8 yuan ($10.27). Trading in Hong Kong is expected to begin on November 5 while a trading date on the Shanghai leg is yet to be disclosed.

Commodities and other assets

• Gold traded higher on Friday, rising as much as 1.2%, to $1,889.81 per ounce. However, the precious metal dropped 1.33% this week for its first three-week losing streak since Sept. 13, 2019. For the month, Gold closed down 0.82%, its first three-month losing streak since April 2019.
• Oil prices fell with the US benchmark West Texas Intermediate (WTI) crude dropping as much as 2.7%, to $35.21 per barrel. International benchmark Brent crude slipped 2.3%, to $36.80 per barrel, at intraday lows.
• Meanwhile, US treasury yields rose despite stock sell-off. Bonds are usually the bastion of strength and safety during risk-off moments. Bond yields move opposite price, and the 10-year yield has risen to 0.85%, just below its recent high of 0.87%.

Currencies

• The USD posted its largest weekly percentage gain since late September, with investors scooping up dollars due to fears of a contested election and the economic impact of renewed lockdowns in France, Germany, and some regions of Spain.
• In afternoon trading, the ICE U.S. Dollar Index, a measure of the currency against a basket of six major rivals, rose 0.2% to 94.035. On the week, the index was up 1.4%, its best weekly performance in more than a month.
• Friday’s economic data showed U.S. consumer spending exceeding forecasts had little impact on the currency market.
• EURUSD fell 0.3% to $1.1643 after sliding to a four-week low of $1.1640. The euro remains pressured overall after the European Central Bank on Thursday flagged further monetary easing in December.
• Against the Chinese yuan in the offshore market, the dollar fell 0.2% to 6.6945 yuan.

Next week

• Investors will have a lot of information to digest, including the presidential election and uncertainty associated with it.
• Ant Group’s highly anticipated IPO lists in Hong Kong.
• Watch out for our Monday Weekly Market Outlook that provides insights on what’s coming up that week.