Market Summary
The S&P recorded its fourth consecutive week of losses, falling 0.6%, marking its longest losing streak since August 2019. The Index is now down 8% from the record highs set in early September. However, the tech-heavy Nasdaq managed to eke out a 1.1% gain last week, with the usual suspects (FAANG stocks) driving performance, though these titans have had a rocky time so far in September.
Equities
0.60%S&P 500
There was little in the way of fundamental news to change the picture that has driven the last month’s losses, with the most recent correction still viewed as a normal pullback as opposed to a shift to a bear market.
Currency
2.0%USD/EUR
The dollar reclaimed some ground this week, reaching a two-month high against the Euro. Signs of a slowdown in the nascent recovery from the pandemic and political uncertainties have kept investors on guard, aiding the greenbacks recent recovery.
Bond Yields
0.67%US 10Y TREASURY YIELD
The 10-year Treasury yield fell during marginally the week, remaining range-bound between 60-70bps as persistent uncertain curtails any movement away from the current historic lows.
Commodities
-2.6%CRUDE OIL
Crude Oil is now set to record its first monthly fall since April with rising coronavirus cases dashing hopes for a smooth recovery to full demand.
best2.2%Technology
Worst-8.60%Energy
Market Outlook
The likelihood is that the recent pullback in markets could continue over the coming weeks with pre-election uncertainty and escalating virus figures forcing localized shut-downs. Fundamentally, recent market movements are within the realm of normal market activity, given the pace of the most recent market rally witnessed in August.
The wait for a renewed stimulus package in the U.S drags on with any new deal, now likely to be a post-election event, raising the question of whether the previous stimulus support can sufficiently sustain the economy until that point.
The much-anticipated rotation into traditional value and small-cap stocks now looks set to be delayed further by the more pressing short-term uncertainty. The large-cap stay-at-home winners that we have witnessed over recent months may offer more favorable returns in relative terms in the coming weeks.
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