Market Recap: A Week in Review – Major Global Market Trends and Key Developments
Last week, the global financial markets witnessed several significant trends and key developments that impacted investors around the world. Let’s take a closer look at some of the major stories:
Stock Markets
The S&P 500 and the Nasdaq Composite both posted gains last week, with the S&P 500 closing at a new all-time high on Friday. The Dow Jones Industrial Average, however, finished the week marginally lower. European stocks also saw gains, with the DAX and the FTSE 100 both posting solid weekly returns.
Currencies
The US dollar weakened against most major currencies last week, with the euro and the Japanese yen both gaining ground. The British pound also saw gains after Boris Johnson secured a deal to leave the European Union with a new withdrawal agreement.
Bonds
The US 10-year Treasury yield continued its downward trend, closing the week at around 1.54%. The decline in yields was driven by renewed concerns over global economic growth, as well as expectations that the Federal Reserve will keep interest rates low for an extended period.
Commodities
Oil prices continued their rally last week, with both Brent and WTI crude hitting multi-year highs. The price of gold also gained ground, trading above $1,800 per ounce as investors sought safe-haven assets.
Key Developments
The week was marked by several key developments, including the Federal Reserve’s interest rate decision, which saw the central bank maintain its current policy stance. Additionally, there were several notable earnings reports, including from tech giants Microsoft and Apple, which both beat expectations.
Weekly Market Recap
Welcome to this week’s market recap! In today’s fast-paced global economy, keeping up with the latest
economic indicators
and
market trends
can be a challenge. This weekly recap aims to provide you with valuable insights into the major
economic indicators
that impact financial markets around the world and the
market trends
that are shaping the investment landscape. By staying informed about these key drivers, you’ll be better positioned to make informed decisions and adjust your investment strategies accordingly.
Major Global Economic Indicators
Each week, we’ll cover a selection of essential economic indicators from around the world. These may include:
- Interest Rates: Set by central banks, interest rates influence borrowing costs and, in turn, economic growth and inflation.
- Gross Domestic Product (GDP): A measure of a country’s economic output and growth.
- Consumer Price Index (CPI) / Inflation: A measure of the average change in prices for a basket of goods and services.
- Unemployment Rates: A measure of the percentage of the labor force that is unemployed.
- Retail Sales: An indicator of consumer spending, which is a significant contributor to economic growth.
Market Trends
In addition to economic indicators, we’ll also examine the market trends that are impacting various asset classes, such as:
- Stocks: Equities can be influenced by factors such as earnings reports, economic data, and geopolitical events.
- Bonds: Factors impacting the bond market may include interest rates, inflation, and geopolitical risks.
- Commodities: The prices of commodities like oil, gold, and agriculture products can be affected by supply and demand dynamics, as well as geopolitical events.
North American Markets Update
North American Markets
U.S. Stock Market (Dow Jones Industrial Average, S&P 500, Nasdaq Composite)
The U.S. stock market continued its positive trend last week with the Dow Jones Industrial Average (DJIA) adding 1.3%, S&P 500 (S&P 500) gaining 1.6%, and the Nasdaq Composite (Nasdaq) surging by 2.4%. The Technology sector, led by megacap stocks like Apple (AAPL) and Microsoft (MSFT), continued to outperform. Healthcare and Finance sectors also contributed significantly to the market’s growth.
Key Sectors: Technology, Health care, Finance
Some major company news and earnings reports influenced the market:
- Microsoft (MSFT) reported earnings and revenue that beat analysts’ expectations.
- Apple (AAPL) unveiled its new iPhone 13 series and Apple Watch Series 7.
- Amazon (AMZN) announced its acquisition of MGM Studios for $8.45 billion.
Canadian Market (Toronto Stock Exchange
)
The Toronto Stock Exchange saw a weekly gain of approximately 1%, with the S&P/TSX Composite Index showing a steady upward trend. The Energy sector, fuelled by rising oil prices, was the leading performer last week.
Key Sectors: Energy, Materials, Financials
Some notable company news and developments influenced the market:
- Suncor Energy (SU) reported a stronger-than-expected quarterly profit due to rising oil prices.
- Canadian National Railway (CNR) announced a $3.6 billion deal to buy out its minority partner in the Port of Prince Rupert.
I European Markets
Eurozone (DAX, FTSE 100, CAC 40)
Weekly performance summary: The Eurozone markets experienced a volatile week, with the DAX down 0.9%, the FTSE 100 gaining 0.6%, and the CAC 40 losing 2.3%. The German DAX was affected by weak earnings reports from several large companies, while the FTSE 100 was bolstered by strength in the pound. The CAC 40, on the other hand, was hit hard by political tensions between France and Italy over budget disputes.
Impact of Brexit and EU policy updates on the markets: The uncertainty surrounding Brexit continued to weigh on European markets, with some investors hesitant to make significant investments until a clearer picture emerges. Additionally, the EU’s proposed digital services tax and its stance on tech giants such as Google and Amazon also had an impact on the markets.
Major economic indicators and key sectors: Economic data from the Eurozone, including inflation figures and industrial production numbers, were closely watched by investors. The auto sector also remained a key focus, with Volkswagen and BMW set to report earnings.
UK Market (FTSE 250, FTSE 100)
Weekly performance summary: The UK markets had a more positive week, with the FTSE 250 up 1.3% and the FTSE 100 gaining 1%. The mid-cap index was boosted by strong earnings reports from several companies, while the blue-chip index benefited from a weaker pound.
Analysis of the impact of political developments on the market: The Conservative Party’s win in the recent local elections was seen as a boost for Prime Minister Boris Johnson and his plans to deliver Brexit. However, uncertainty remains over the timeline and terms of the UK’s departure from the EU, which could continue to impact the markets.
Notable company news and earnings reports: Several notable companies reported earnings, including Royal Dutch Shell and British American Tobacco. Both companies saw strong profits, but investors were focused on their plans for future growth.
Other European Markets (Swiss Market, Scandinavian Markets)
Weekly performance summary: The Swiss Market was up 0.5%, while the Scandinavian Markets were mixed, with Norway’s market gaining 1.4% and Sweden’s losing 0.2%. The strength of the Swiss franc and the impact of global economic trends were key drivers in the Swiss Market, while earnings reports and political developments were major factors in the Scandinavian Markets.
Key drivers of market trends in these regions: In the Swiss Market, the strength of the franc and global economic conditions were major factors. In the Scandinavian Markets, earnings reports from companies such as Ericsson and Nokia, as well as political developments in Sweden and Denmark, were key drivers.
Asian Markets
Chinese Market
Weekly Performance Summary: The Shanghai Composite index gained 2.4% last week, while the Shenzhen Component surged by 3.5%. These gains were driven by robust earnings reports from Chinese tech giants and optimism over the government’s continued support for the economy through monetary easing and fiscal stimulus measures.
Analysis: The Chinese market was influenced by several key factors last week. On the economic policy front, the People’s Bank of China cut its benchmark lending rate for the fifth time this year to support the economy amid slowing growth. Geopolitical tensions, however, continued to cast a shadow over the market. The ongoing trade dispute between China and the US remains unresolved, with both sides imposing tariffs on each other’s exports. This uncertainty has caused some volatility in the Chinese market, but overall, investors remain optimistic about the country’s economic prospects.
Japanese Market
Weekly Performance Summary: The Nikkei 225 index lost 0.7% last week, while the TOPIX index was down by 0.6%. These losses were mainly attributed to a stronger yen and concerns over the global economic slowdown.
Key Sectors: Key sectors driving the Japanese market include technology, automobiles, and consumer goods. Tech giants like Sony and Panasonic reported strong earnings, while carmakers such as Toyota and Honda saw weak sales due to the ongoing chip shortage.
Indian Market
Weekly Performance Summary: The Sensex and Nifty indices in India both gained over 1% last week, driven by strong earnings reports from IT and finance sectors.
Notable Company News: Tata Consultancy Services (TCS) reported strong quarterly earnings, with net profit up by 13.7%. Infosys also announced a better-than-expected quarterly profit, which boosted investor sentiment.
South East Asian Markets
Weekly Performance Summary: The Straits Times Index in Singapore gained 0.4%, while Indonesia’s Jakarta Composite index was up by 2.5% and Malaysia’s FBM KLCI index lost 0.1%.
Key Drivers: In Singapore, the tech sector was a major driver of market trends due to strong earnings reports from companies like Sembcorp Industries and ST Engineering. In Indonesia, the rupiah’s depreciation against the US dollar boosted the export sector, while in Malaysia, concerns over political instability and weak economic data weighed on investor sentiment.
Commodities Market: Weekly Price Analysis and Influencing Factors
Performance Summary and Analysis of Weekly Price Movements for Major Commodities
The past week in the commodity markets saw significant fluctuations, with oil prices increasing by 2.8%, closing at $73.40 per barrel, their highest level since October 2018. Similarly, the price of gold surged by 3.6%, reaching $1,947 per ounce – a new all-time high.
Agribusiness
In the agriculture sector, wheat prices declined by 1.2%, closing at $6.75 per bushel due to ample global supplies, while corn prices dropped by 3.1% to $3.82 per bushel as a result of improved weather conditions and growing harvest expectations.
Analysis of Factors Influencing Commodity Prices: Geopolitical Tensions and Supply & Demand
Geopolitical Tensions
The escalating tensions between major oil-producing nations and other global powers have contributed to the upward trend in crude prices. Specifically, the ongoing dispute between the OPEC+ alliance and OPEC+’s refusal to extend production cuts beyond April 2021 has caused uncertainty and fears of supply shortages in the oil market.
Supply & Demand
In the precious metals sector, gold’s record-breaking performance can be attributed to both safe-haven buying and decreased real yields. On the other hand, supply constraints and growing demand for agricultural goods have driven up prices in the agricultural commodity market.
Currency Market Analysis
VI. Currency Market: A weekly analysis of major currencies against the US dollar reveals some interesting trends and movements. Last week, the Euro experienced a modest gain against the greenback, while the British Pound saw significant volatility due to political developments. Conversely, the Japanese Yen and Swiss Franc both depreciated against the US dollar.
Weekly Performance:
- Euro (EUR): +0.5%
- British Pound (GBP): -2.1%
- Japanese Yen (JPY): -0.8%
- Swiss Franc (CHF): -1.3%
Factors Affecting Exchange Rates:
Currency exchange rates can be influenced by several factors. One of the most significant factors is interest rate decisions by central banks. When a central bank raises interest rates, their currency tends to appreciate because it becomes more attractive for investors seeking higher yields. Conversely, when a central bank lowers interest rates, its currency depreciates as it becomes less attractive. Another important factor is economic data releases, which can impact investor sentiment and, subsequently, the value of a currency. For instance, stronger-than-expected economic data may lead to appreciation of that currency as it strengthens investor confidence in the country’s economy.
V Conclusion
Summary of the major market trends and key developments during the week: The past week witnessed a volatile trading session as investors digested a flurry of economic data releases and geopolitical news. Stocks saw a significant decline on Monday, following reports that the U.S.-China trade deal was not progressing as anticipated. However, gains were made throughout the week, with the S&P 500 and Dow Jones Industrial Average closing at record highs on Friday. The
jobless claims
came in lower than expected, while
GDP growth
for the second quarter was revised upwards to 6.5%.
Analysis of the potential impact on investors and traders: The market’s resilience in the face of geopolitical tensions and economic data releases suggests that investors are increasingly confident in the global economic recovery. However, it’s important to note that the trade situation between the U.S. and China remains uncertain, and any unexpected developments could lead to renewed volatility in the markets. Traders will be closely watching upcoming economic data releases for signs of inflation or economic weakness, which could impact the Federal Reserve’s interest rate decision later this month.
Preview of the upcoming economic data releases and events to watch for in the coming week: This week, investors will be keeping a close eye on several key economic indicators. On Monday,
ISM Manufacturing PMI
and
construction spending
data will be released, followed by the
FOMC meeting minutes
on Wednesday. Later in the week,
nonfarm payrolls
and
unemployment rate
data will be released on Friday. In terms of events to watch for, the G-20 summit in Japan will be taking place over the weekend, where trade tensions between the U.S. and China are expected to be a major point of discussion.
