Weekly Market Update

Author : Rachel Poole
Date : September 26, 2020

Global Market News

Global equities fall as volatility edges up
Global equities were down again this week. The S&P 500 recorded its fourth consecutive week of losses. The yield on the US 10-year treasury bond dropped to 0.66% while the price of a barrel of West Texas Intermediate crude oil fell 2.4% to $40.11. On the other hand, volatility hit a high of 30 this week before recovering back to 26 on Friday afternoon.

Services are struggling to recover
Flash readings of purchasing manager indices reveal a continued recovery for manufacturing activity, but the services sector is having difficulty recovering as an uptick in Covid-19 cases has caused consumers to be more cautious. Europe has seen a greater loss in momentum, with PMIs dropping from 50.5 to 47.6, as compared with the US which declined from 55 to 54.6. Further threatening the services sector is the return of Covid-19 restrictions to several European countries as cases continue rising.

Updated Market Figures

Coronavirus Updates

Covid-19 by the numbers
Global Confirmed Covid-19 cases: 32,400,000 Global Covid-19 deaths: 985,000
US Confirmed Covid-19 cases: 7,002,000 US Covid-19 deaths: 203,000
*As of Friday evening

New York to create own vaccine task force
The Food and Drug Administration (FDA) was, reportedly, considering stricter guidelines for an emergency-use authorization of a Covid-19 vaccine but the White House may not approve them. Due to concern that the vaccine process has become too politicized, New York Governor, Andrew Cuomo, said the state will create their own independent task force to approve a vaccine.

Geopolitics Spotlight

Indian farmers protest new farm bills

Farmers in India are protesting a controversial bill passed by the government this week. Prime Minister Narendra Modi insists that the new rules give farmers the option to sell their produce to private buyers while the government will still purchase staples at guaranteed prices. However, farmers are accusing the government of getting rid of traditional wholesale markets, which ensure timely payments to producers, and putting poor farmers at risk of being shortchanged by private buyers.

Palestinian factions agree to new election
Rival factions in Palestine, Fatah and Hamas, have agreed to hold Palestine’s first elections in nearly fifteen years during reconciliation talks this week. The elections will choose the next Palestinian Legislative Council, the Palestinian Authority President, and the Palestinian National Council. Leaders from each faction have sought to bring about greater cooperation and collaboration as two Arab nations have recently normalized relations with Israel.

US Social & Political Developments

Trump declines to commit to a peaceful transfer of power

President Donald Trump has refused to commit to a peaceful transition of power if he loses the November presidential election. He also made a comment this week that he expects the election to reach the Supreme Court, referencing his concerns about mail-in ballot fraud. Trump is seemingly preparing for such an outcome by rushing to replace Supreme Court Justice Ruth Bader Ginsburg who passed just last week. President Trump is expected to announce his nominee on Saturday instead of leaving the nomination up to whoever wins the election. A Republican nomination could potentially turn the tables on a Supreme Court election decision, if it comes to it.

House passes spending bill and relief negotiations restart
The US House of Representatives has passed a bill to fund the federal government through the middle of December, curbing fears of a government shutdown. The Senate is expected to pass the bill next week. Congress is also expected to restart relief negotiations after months of disagreements between Republicans and Democrats. House democrats are now preparing a smaller relief package of $2.4 trillion instead of $3.5 trillion.

Corporate/Sector News

Oracle reaches deal, TikTok and WeChat seek injunctions

Oracle, along with Walmart, has reached a deal with TikTok’s parent-company ByteDance to take a minority stake in the company. However, there have been conflicting accounts as to what the equity breakdown of the new entity, TikTok Global, will be. Meanwhile, both Tencent, owner of WeChat, and TikTok have filed preliminary injunctions to stop the US Commerce Department from banning the apps.

US junk bond sales hit new record

US high-yield bond issuance for 2020 has surpassed the previous record of $329.6 billion set in 2012. The liquidity boost and zero-interest rate policies from the Federal Reserve have turned the bond industry into a borrower’s market. All-in yields for US junk bonds have dropped to 5.81% which is close to pre-pandemic levels.

California to ban gasoline-powered cars by 2035
California’s Governor has announced an order to ban gasoline-powered cars in the state by 2035. This would mean that all new cars sold in the state by that time must be zero-emission vehicles. Though 15 years doesn’t seem too far off, several major automakers are making big electrification pushes already. Many countries, including France, Germany, and the United Kingdom are adopting similar goals to remove gas-powered vehicles from the road in the near future.

Image of the Week

Video of the Week

Volkswagen to compensate Brazil dictatorship victims
Source: DW News