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Market Summary

Every little bit helps. This week the S&P 500 recorded its sixth positive week out of the past seven. An increase of 0.7% over the week was enough to take the Index to within touching distance of its record high set back in February 2020. New weekly jobless claims fell below 1 million for the first time since the pandemic hit the U.S. and positive expectations in relation to continued government stimulus, maintained market strength. The Index now sits 0.4% below it’s all-time. While it is highly likely that a new record will be set this week, just by sheer proximity alone, Congress’s failure to agree on an additional pandemic relief package prior to the two-week recess will make this new record all the harder to maintain.

Equities

0.7%S&P 500

The market rotation witnessed over the last two weeks has allowed equities Index’s to continue climbing as the slower-growing value stocks outperformed their growth counterparts, allowing the index as a whole to continue its upward trajectory.

Currency

-0.3%USD/EUR

Muted movements across currency markets as the U.S dollar lost some of the ground it regained last week. Any significant gains for the Euro were stalled as Europe introduced new travel bans to help contain the current uptick of the virus in the region.

Bond Yields

0.70%US 10Y TREASURY YIELD

Treasuries sold off this week. The 10-Year Treasury Yield increased from 0.54% to 0.7% as the ultra low yield environment proved unsustainable following a higher than expected inflation signal(July CPI) and some positive economic indicators.

Commodities

-3.9%GOLD

Gold’s unrelenting run stalled somewhat this week as it pulled back from its $2,000 per ounce high, but with the likes of Berkshire Hathaway now holding new gold positions, the Gold rush may not be over just yet.

best3.2%Industrials

Worst-1.8%Real Estate

Market Outlook

The market will remain focused on the value stock rotation we have seen over the last two weeks. Lagging sectors such as Industrials, Financials, and Energy have driven the positive equity returns of late, up over 3% last week. In contrast, areas of leadership such as Technology and Communication Services, have seen momentum drift.

It’s a big week for retail as the most significant retail names report their Q2 earnings. U.S retail sales rose 1.2% in July, marking the third consecutive monthly gains from the pandemic lows. Despite the positive economic indicators, the upcoming earnings reports will provide an essential insight into the scale of the lockdown effect for one of the hardest-hit sectors.

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