Weekly Market Update

Author : Rachel Poole
Date : September 19, 2020

Global Market News

Global equities continue to drop
After a strong start to the week for US tech and airline companies, global equities dropped lower on the week. The yield on the US 10-year Treasury note ended the week at 0.69%, while WTI oil gained significant ground and closed at $41 (an almost 11% gain for the week). Volatility, as measured by the CBOE Volatility Index (VIX), remained around 26.

Central Banks to keep rates low
At a meeting this week, the US Federal Reserve decided to keep interest rates near zero for the next few years or until inflation consistently rises. The Federal Open Market Committee has changed its economic forecasts for 2020 to reflect a smaller decline in GDP and a lower unemployment rate. Across the pond, the Bank of England is holding its benchmark policy rate at 0.1% but said it could cut interest rates below zero for the first time in history.

Updated Market Figures

Coronavirus Updates

Covid-19 by the numbers
Global Confirmed Covid-19 cases: 30,300,000 Global Covid-19 deaths: 948,000
US Confirmed Covid-19 cases: 6,710,000 US Covid-19 deaths: 198,000
*As of Friday evening

Pandemic closures and new lockdowns
According to data from Yelp, almost 60% of businesses that have closed during the Covid-19 pandemic will never reopen. Among these businesses, restaurants have suffered the most as more than 100,000 restaurants have closed permanently or in the long term, as reported by the National Restaurant Association. As cases continue to rise, the risk of new lockdowns is also rising, especially in Europe. The World Health Organization has warned that the situation in Europe is getting very serious since case numbers are rising faster now than they were in March.

Geopolitics Spotlight

Pressure mounts on Lukashenko

Belarus’ President Alexander Lukashenko announced he would withdraw troops from the streets and close the country’s borders with Western countries after facing rising pressure to control the government’s violent repression of mass protests. Yesterday, the European Parliament officially rejected the election results and said it would not recognize Lukashenko if he continues his role as President after his current term ends in November. Both the European Union and US are considering sanctions on Belarus for the government’s actions and human rights violations.

Japan names new Prime Minister
Japan’s legislature has named Yoshihide Suga as the country’s new Prime Minister. Suga has been chosen as the Liberal Democratic Party’s leader in place of Shinzo Abe who resigned just a few weeks ago due to health reasons. Suga has already formed a cabinet and promises to uphold the policies set by Abe, popularly known as Abenomics, to improve Japan’s battered economy.

US Social & Political Developments

Justice Ruth Bader Ginsburg dies after decades of service

Supreme Court Justice Ruth Bader Ginsburg died yesterday evening as a result of complications related to cancer. She served on the Supreme Court for nearly 27 years and was widely known for her leadership and accomplishments in bringing about greater gender equality in the US. As seen by the flood of tributes that have poured in since the announcement of her death, Justice Ginsburg was extremely admired and respected. Her integrity and steadfast leadership for the rule of law was unmatched. On the other hand, her death has brought about political tensions over exactly when a person will be nominated to fill her spot. Republicans are considering a nomination made by President Trump before the November election and the Democrats believe her replacement should be appointed by the next president, as Justice Ginsburg also desired.

US to make $7 billion arms deal with Taiwan

The US is expected to make a $7 billion arms deal with Taiwan. The Trump administration has sold roughly $15 billion in arms to the country over the last few years. Unsurprisingly, this has fueled tensions with China, who began a military exercise near the Taiwan Strait yesterday, seemingly, in response to news of the arms deal.

Trump announces new round of Farm aid
This week, President Donald Trump unveiled $13 billion in new aid to farmers who have faced economic hardship due to the Covid-19 pandemic. Trump made the announcement at a campaign rally in Wisconsin, a state seen as a key battleground in the upcoming presidential election. This new round of aid will be in addition to the $19 billion of aid approved in April.

Corporate/Sector News

TikTok and WeChat to be banned this weekend

The Trump administration will begin banning Chinese apps such as TikTok and WeChat on Sunday night. On Friday, the US Commerce Department issued regulations to bar US companies from providing downloads or updates for the TikTok and WeChat apps after 11:59 p.m. Sunday. Talks between ByteDance and Oracle to create a new US-based owner of the video-sharing app TikTok are still ongoing.

Snowflake IPO makes an impressive debut

Cloud computing company, Snowflake, doubled in value at its opening debut on Wednesday, giving it a market capitalization of $70 billion. The company was previously valued at only $12 billion back in February. Snowflake’s data warehouse allows companies to analyze and manage multiple data sources. The company has seen massive revenue growth since shifting towards the pandemic-induced remote work trend.

Image of the Week

The $88 Trillion World Economy in One Chart

Video of the Week

The ancient manuscripts of Egypt’s Sinai monastery
Source: Al Monitor