Weekly Market Update

Author : Tyler Thompson
Date : July 27, 2020

Global Market News

Global equities suffer slight drop
Global equities ended the week down slightly as news of rising unemployment and heightening tensions between the US and China beat out stimulus and vaccine hopes. The yield on the US Treasury dropped to 0.59%, while a barrel of West Texas Intermediate crude oil rose slightly to $41.13. Volatility, as measured by the Cboe Volatility Index (VIX), rose to 26.46.

US unemployment falters
US unemployment broke a 15-week streak of declining initial claims, settling at 1.4 million new claims for the week ended July 18. This marks the 18th consecutive week of initial unemployment claims above the 1 million mark. This comes as Congress scrambles to pass a relief bill before August, as the current $600/week unemployment insurance of the current plan is set to expire at the end of July.

Updated Market Figures

Coronavirus Updates

Covid-19 by the numbers
Global Confirmed Covid-19 cases: 15,500,000
Global Covid-19 deaths: 634,000
US Confirmed Covid-19 cases: 4,120,000 US
Covid-19 deaths: 147,000
*As of Friday evening

Coronavirus briefings resume amid rising case counts, early vaccine results
The White House resumed its weekly coronavirus briefings this week, with the President encouraging the wearing of masks in situations where social distancing is not possible. Trump also indicated that the pandemic is likely to “get worse before it gets better,” as news of rapidly increasing case counts burden Florida, Texas, California, and other states. AstraZeneca announced that the results of its vaccine study with Oxford University were encouraging, as the vaccine candidate produced a dual immune response in patients.

Geopolitics Spotlight

EU passes Covid-19 stimulus plan
The European Union reached an agreement on a sweeping stimulus plan to combat the effects of the coronavirus pandemic. The 750 billion euro agreement includes provisions prioritizing the nations hardest-hit by the virus, using bonds sold collectively by the bloc. This latter measure was a matter of great contention at the lengthy negotiations in Brussels, as the “Frugal Four” nations of Austria, the Netherlands, Sweden, and Denmark vigorously opposed the assumption of further debt. This divide, along with rule-of-law concessions to Hungary and Poland, illustrates some fracture points within the Union which could hamper future crisis responses.

US, China order consulate closures
Tensions between the US and China have continued to heat up as both nations demanded the closure of major consulates. On Wednesday, the US ordered the CCP to close their Houston consulate, citing needs to protect US intellectual property and the private information of Americans. This order comes as two Chinese hackers were accused of attempting to steal data from US firms conducting coronavirus research. Beijing responded in kind on Friday, ordering the US consulate in Chengdu to close. The Chengdu consulate is considered an outpost for Tibetan developments and strategic weapons intelligence in the area.

US Social & Political Developments

More federal agents deployed to US cities
President Trump announced Wednesday that the Justice Department would be sending hundreds of federal agents to cities such as Chicago and Kansas City. The president cited a recent increase in gun violence and an overall lack of order in the cities as the impetus for the decision. This order comes in the wake of controversies over the actions of federal officials in Portland and a greater national dialogue on the role of the police in everyday life.

11 Chinese companies sactioned over Xinjiang violations
The Commerce Department added 11 companies to a growing trade blacklist over human rights concerns regarding the Uighur minority. Several of the companies were named as having used forced labor in production. The report also accuses two companies of assisting in “genetic analyses used to further the repression of Muslims.” This is the latest in a series of state actions looking to stop the “campaign of repression” against Uighurs in China’s Xinjiang region.

Corporate/Sector News

Major companies report positive quarters, Tesla eligible for S&P 500 inclusion
This week saw a flurry of earnings reports, with IBM, Coca-Cola, Lockheed Martin, Texas Instruments, Microsoft, and Tesla reporting positive quarters. Notably, Tesla reported its fourth consecutive quarter of profitability, marking it eligible for inclusion in the S&P 500. Tesla has seen a meteoric appreciation in the past few weeks, overtaking Toyota as the world’s most valuable auto manufacturer by market cap in early July.

Precious metals climb
The precious metals market saw several developments this week. Gold has continued its ascension, breaking above $1900 by Friday afternoon. This is within striking distance of the previous record of $1920.30 set in 2011. Silver saw a significant climb on the week, rising nearly 17% to end just above $23. These advances come in the midst of increasing uncertainty regarding the future trajectory of the coronavirus pandemic and the economic repercussions.

This week from Black Summit

And Now What? Financial Strategy in the Midst of Contrasting Signals – John Charalambakis
Covid-19 and the Day After – Rachel Poole and Tyler Thompson

Image of the Week

How Much Do Countries Spend on Healthcare Compared to the Military?

Video of the Week

How Energy Got So Cheap
Source: Wall Street Journal