Week ending 14th August 2020.

Global equity markets ended the week higher thanks to economic data which shows that the global economy is continuing to recover.

World Markets at a Glance

For example, Thursday’s (13 August 2020), US jobless claims showed that the US employment market is recovering despite the recent coronavirus resurgence, while US retail sales not only beat expectations but June’s reading was revised sharply higher.  This combined with higher mortgage applications and improving import prices suggests the US economy is well and truly on the road back to normal after the coronavirus shock.

Likewise, China’s industrial production data for July, provided clear evidence that their economic recovery remains intact, with a rise of 4.8%.

Unfortunately, global equities gave up some of their gains towards the end of the week after talks between Republicans and Democrats over a new virus relief stimulus package remained in stalemate, coupled with news that this weekend’s US/China phase 1 trade review had been postponed due to scheduling conflicts!

However, Donald Trump talked positively about the trade deal during a press conference, saying that China is giving US farmers “the largest orders they’ve ever seen” and also referred to a conversation that he had with Robert Lighthizer, the US Trade Representative, who is “satisfied” with China’s commitments to the trade deal – which suggests to us that the delay is simply to give China more time to increase purchases of US goods (which are currently well behind target) and therefore the six-month trade review will eventually get the green light.

This coming week, all eyes will again be on US weekly jobless claims data (on Thursday 20 August 2020).  Additionally, we get the minutes from the last Fed meeting on 29 July 2020.  Other important US data includes PMI; the Empire State Manufacturing index; the Philadelphia Fed Manufacturing Index; building permits; housing starts; and existing home sales.

In the UK we have CPI inflation; retail sales and PMI data.  Elsewhere we have Eurozone CPI and PMI; and Japanese Q2 GDP.

Investment Management Team