Analytics, 25 July 2020
Week 30 in Brief
How did the major indices perform?
U.S. stocks closed lower Friday driven by the Nasdaq Composite which recorded its first back-to-back decline since mid-May. The week was moved by second-quarter earnings reports which saw tech companies drop. Investors worried about rising tensions between China and the United States and slow progress on another fiscal stimulus bill in Washington.
- The Dow Jones Industrial Average declined 182.44 points, or 0.7%, to close at 26,469.89, while the S&P 500 dropped 20.03 points, or 0.6%, closing at 3,215.63 and the Nasdaq Composite fell 98.24 points or 0.9% to close at 10,363.18.
- For the week, the Dow ended 0.8% lower, the S&P 500 had a decline of 0.3%, and the Nasdaq lost 1.3%. The Nasdaq-100 skidded 1.5% for the week, and the Russell 2000 which tracks smaller companies, finished 0.4% lower.
- Tech stocks struggle this week lead to weekly losses for the indexes:
- Facebook shares slid 0.81% on Friday and Alphabet declined by 0.56%. Microsoft and Apple also ended the session lower. Intel plunged more than 16% after it offered disappointing guidance for the third quarter and delayed the release of its next-generation chips.
- Tesla posted its fourth straight quarterly profit and is set to join the S&P 500 index. Tesla shares are up about 240% year-to-date but down for the week.
- Wall Street has been heartened by quarterly results that have exceeded a low bar in the middle of a pandemic, but a run-up in gold prices to a near-record and super-low yields in government debt implies that investors fret the market remains vulnerable to pullbacks after the Nasdaq and the S&P 500 index posted their worst daily drops since June 26 on Thursday.
- Meanwhile, shares of Goldman Sachs dropped 0.8% Friday, after Bloomberg reported that the bank will pay $3.9 billion as part of a deal that would see Malaysia drop all criminal charges for its role in the 1MDB corruption case.
- A report on new home sales showed a rise of 13.8% in June, hitting an annual rate of 776,00 compared with a revised 682,000 in the prior month.
European markets finished sharply lower on Friday with shares in Germany leading the region.
- The DAX is down 2.02% while France’s CAC 40 is off 1.54% and London’s FTSE 100 is lower by 1.41%.
- The pan-European Stoxx 600 provisionally ended 1.7% lower, with tech stocks tumbling 3.8% to lead losses as all sectors and major bourses slid into negative territory.
- A 750-billion euro EU recovery fund and hopes of an eventual COVID-19 vaccine had put European stocks on course to end the week higher until tensions escalated between the US and China.
- British Gas owner Centrica surged 16.8% to post its best session in two decades, as it announced plans to sell its North American business Direct Energy to NRG Energy for $3.63 billion.
Asia markets finished lower following rising tensions between the U.S. and China and a selloff of tech stocks on Wall Street.
- Mainland Chinese stocks led the region with the Shenzhen component diving more than 4% after the latest escalation.
- The Shanghai Composite is down 3.86% while Hong Kong’s Hang Seng is off 2.21%.
- On Friday, China ordered the U.S. consulate in the western city of Chengdu closed, in retaliation for the U.S. closure of the Chinese consulate in Houston following allegations of spying.
Commodities
- Oil prices moved slightly higher on Friday supported by economic data from Europe, but gains were limited as tensions between the United States and China flared.
- Brent crude futures fell 34 cents to $42.97 a barrel by 1:11 p.m. by 1711 GMT. U.S. West Texas Intermediate (WTI) crude futures slipped 18 cents to $40.89 a barrel. For the week, Brent was on track to fall 0.5%, while U.S. crude was set to rise.
- Meanwhile, uncertainty around the coronavirus and the rising U.S.-China tensions pushed gold prices to an all-time closing high. The precious metal settled at $1,897.50 per ounce.
Currencies
- USD posted its biggest weekly decline in almost four months against a basket of currencies and also saw its largest weekly percentage loss against a surging euro since late March.
- In afternoon trading, the dollar fell 0.8% against the yen to 105.99 yen, having dropped to 105.68 yen, the lowest since mid-March.
- Against a basket of currencies, the dollar slid 0.4% to 94.42. Earlier in the session, it plunged to 94.358, a fresh 22-month low.
- Meanwhile, the euro hit a fresh 22-month high against the dollar and was last up 0.4% at $1.16415 while the pound was up 0.4% against the dollar at $1.2789.
Next week
- Apple, Alphabet, Amazon, and Facebook are all set to report quarterly results next week.
- The market will also be looking at the escalating US-China tensions.