Market Update

As depicted in the accompanying chart, it is advisable to filter out the media noise, for the majority of global equity markets witnessed a positive trend last week. The FTSE-100 experienced a 2.28% rise, and on Wall Street, the Dow Jones surged over 1,000 points, marking a 3.80% increase, while the S&P 500 climbed by 2.45%.
Despite this positive momentum driven by robust global economic data, the media spotlight remained fixed on US politics, geopolitical tensions, and the ongoing impact of the coronavirus. In the US, partisan conflicts between Republicans and Democrats persisted, overshadowing critical discussions on a new fiscal stimulus package, leaving many American workers in a precarious situation. Additionally, former President Donald Trump imposed sanctions on Hong Kong Chief Executive Carrie Lam and issued an Executive Order banning popular Chinese apps, TikTok and WeChat, citing national security concerns.
It is worth noting that Trump's assertive stance against China coincides not only with the approaching November Presidential elections but also with the upcoming US-China meeting to evaluate their Phase 1 trade deal. Trump's strong rhetoric resonates with American voters frustrated by trade imbalances and the handling of the coronavirus outbreak.
Despite Trump's aggressive stance, it seems unlikely that he would jeopardize the trade deal, considering the potential harm to the US economy and American farmers, especially given the 45-day window before the TikTok and WeChat bans take effect. Treasury Secretary Steven Mnuchin recommended executive actions to provide economic relief, including restoring unemployment assistance, suspending payroll tax, and halting evictions, compensating for Congress's inability to agree on a rescue package.
Positive economic indicators included the US ISM manufacturing survey, which rose from 52.6 to 54.2, indicating increased production due to a surge in new orders, reaching 61.5. Additionally, the latest non-farm payroll data revealed a continued recovery in the US employment market, with 1.76 million workers added to payrolls, surpassing expectations and lowering the unemployment rate to 10.2%. Notably, job gains were widespread, with a significant increase in the leisure and hospitality sector, which had been severely impacted by the pandemic.
Looking ahead, the focus shifts to key economic events in the coming week. All eyes will be on the weekly US Jobless Claims data on Thursday (13 August 2020), alongside essential US releases such as CPI inflation, retail sales, industrial production, and the University of Michigan consumer sentiment index. Additionally, markets will closely monitor UK employment data (unemployment rate and average earnings), UK and Eurozone Q2 GDP figures, UK and Eurozone industrial production data, as well as Chinese CPI and retail sales numbers. Stay tuned for our next week's commentaries, as these events are anticipated to significantly influence market dynamics.