Weekly Market Update

Author : Rachel Poole
Date : August 15, 2020

Global Market News

Global equities inch forward

Global equities made slight gains this week. The S&P 500 fell just shy of nearing record territory, shrugging off US-China tensions and Congress’ relief package squabbles. The yield on the 10-Year US Treasury jumped from 0.56% to 0.71% and the price of a barrel of West Texas Intermediate crude rose to $42.13 by market close on Friday afternoon. Volatility, as measured by the Cboe Volatility Index (VIX) held steady around 22 despite fluctuating over the week.

US economy showing improvement

The US economy is showing some signs of healing. The largest increase in core consumer prices (excluding food and energy) since January 1991 demonstrates that some prices could be stabilizing after dropping during the Covid-19 shutdown. Core inflation is now at a 1.6% rate year-on-year on an adjusted basis, jumping 0.6% and marking the biggest increase in nearly 30 years. Across the pond, the United Kingdom reported that its economy shrank 20.4% in the second quarter. So far, the United Kingdom has reported the worse economic hit from the virus and the most deaths.

Updated Market Figures

Coronavirus Updates

Covid-19 by the numbers

Global Confirmed Covid-19 cases: 21,000,000 Global Covid-19 deaths: 762,000
US Confirmed Covid-19 cases: 5,310,000 US Covid-19 deaths: 168,000
*As of Friday evening

Russia approves Covid-19 vaccine

Russia became the first country to grant regulatory approval for a Covid-19 vaccine. The country plans to begin mass inoculation of the vaccine as soon as October, even before clinical testing is complete. Many health experts are questioning the safety of the vaccine since it has gone through less than two months of human trials. The World Health Organization (WHO) is reportedly discussing a WHO pre-qualification of the vaccine with Russian health authorities. Russia has named the vaccine Sputnik V, a nod to the world’s first satellite launched into space by the Soviet Union.

Geopolitics Spotlight

Israel-UAE announce landmark deal

Israel and the United Arab Emirates (UAE) have announced a landmark agreement to normalize their diplomatic relations. As part of the agreement, Israel will temporarily pause its plan to annex parts of the West Bank. The deal was praised by the US (who brokered the talks), the United Nations, several European nations, Egypt, Bahrain, and Oman, but sparked criticism from Iran, Turkey, and Palestine. With this agreement, the UAE becomes only the third Arab state to recognize Israel.

Antigovernment protests rage in Belarus

Deadly protests erupted in Belarus after President Alexander Lukashenko claimed victory in the country’s presidential election amid allegations of vote rigging. More than 6,000 people have been detained by Belarusian police and two people have died. Two opposition leaders have fled the country after the government crackdown. The European Union is considering reimposing sanctions on Belarus while Latvia, Lithuania, and Poland have threatened sanctions if the government does not accept their offer to arbitrate between Lukashenko and the protesters.

Prime Minister of Lebanon resigns

Lebanese Prime Minister Hassan Diab’s has stepped down following nationwide protests and public pressure to resign after devastating explosions in Beirut have sent the country spiraling. Diab’s cabinet will act as a caretaker government until a new one can be elected. The resignation brings a new level of political uncertainty as Lebanon grapples with a tragedy, and a social and economic all at once.

US Political and Social Developments

Kamala Harris named Biden’s VP

Kamala Harris is already making history as the first Black woman and first person of Indian descent to be chosen for a major party ticket. Mrs. Harris’ vibrancy brings a new wave of energy to the Democratic party.

US and China to resume trade talks

The US and China are expected to resume trade talks this weekend as tensions have escalated to new heights in recent weeks. In addition to the drama over a proposed ban of WeChat and TikTok, the US has added dozens of Chinese companies to economic blacklists. Despite the events of the last few months, trade analysts and economists are expecting the phase one trade deal to remain intact since it would be too costly for each side to terminate the agreement now. However, there are a wide range of conflicting viewpoints between the two countries which will undoubtedly make it difficult to achieve any sort of progress.

Corporate/Sector News

Mall owners seek new opportunities

Simon Property Group, the largest US mall owner, and Brookfield Property Partners are entering talks to buy JC Penney’s retail operations. Simon Property Group is fresh off a deal to buy Brooks Brothers out of bankruptcy and is also looking to turn empty space left by bankrupt department stores into Amazon distribution hubs.

Tesla approves 5-for-1 stock split

Tesla has approved a 5-for-1 stock split in order to make stock ownership more accessible to employees and investors after the company’s stock has tripled in value since the start of the year. Each investor holding shares of Tesla will receive a dividend of four additional shares for every share owned on August 21st. Tesla will begin trading with the stock split in full effect on August 31st.

Airbnb to file an IPO

Airbnb will file IPO paperwork later this month. The Covid-19 pandemic drove the home-sharing company’s bookings to near zero but rates have since recovered March levels. Airbnb was valued at $18 billion in April during a fundraising round. The IPO market has seen a lot of action this year, with more than $60 billion raised so far. At this rate, the year is on track to be the highest since the tech boom in 2000.

Image of the Week

All S&P 500 Sectors and Industries, by Size

Video of the Week

Russia’s coronavirus vaccine: Is Putin taking ‘a reckless step’? – DW News