Company / Analytics

Week 37 in brief

North America

Stocks in the US fell to two-month lows after closing on Friday in the reds. Warnings from FedEx on an impending global slowdown were a major influencer in the downtrend as the company went on to withdraw its fiscal year earnings and massively retracted its quarterly earnings forecast lower.

All three major U.S. stock indexes slid to levels not touched since mid-July, with the S&P 500 closing below 3,900, a closely watched support level.

Other factors that contributed to the downtrend were inflation concerns, looming interest rate hikes, and ominous economic warning signs.

How did the major US indices perform

On Friday:

• The Dow Jones Industrial Average fell 139.4 points, or 0.45%, to 30,822.42,
• The S&P 500 lost 28.02 points, or 0.72%, to 3,873.33,
• the Nasdaq Composite dropped 103.95 points, or 0.9%, to 11,448.40.

For the week:

• S&P 500 index was 4.8% lower
• The Nasdaq Composite fell 5.4%
• The Dow Jones Industrial Average or 4.1%

What drove the US market

• FedEx was in the spotlight on Friday 16th September, as its shares recorded their biggest daily drop after the company released its preliminary results for the three months leading to August 31 on Thursday 15th. The stock dropped 23% on Friday following the weaker-than-expected earnings, blaming “global volume softness” that “accelerated” in the final weeks of the quarter. This led to a further selloff in the wider stock market
• Transport stocks are typically seen as a leading indicator for the stock market and the economy. FedEx pointed to weakness in Asia as one of the main reasons for its negative outlook. Shares of shipping rivals UPS and XPO Logistics dropped about 4.5% and 4.7%, respectively, and Amazon’s stock fell 2.1%.
• Another company that took a beating in the market was Adobe Inc. The company suffered the worst one-week decline in 20 years for its share price, as analysts questioned the timing and the price of its dilutive deal to acquire Figma.
• The US Bureau of Labor Statistics released the August Consumer Price Index (CPI) report on Tuesday and the August Producer Price Index (PPI) report on Wednesday, reports that are important in gauging inflation. Investors have been jittery, reacting to any sign of continuing consumer price increases or economic strength heading into the Federal Open Market Committee’s meeting on Sept. 20-21.

How did the European markets perform?

• Stocks trading lower in the US led to a decline in European equities, as European markets traded lower amid growth fears, expectations for further rate hikes, and continued volatility in the energy market weighed on stocks.
• On Friday, The pan-European Stoxx 600 closed 1.6% lower, with all sectors and major bourses in negative territory. The declines sent the STOXX 600 to its worst week in three months, down 2.9%. It comes off the back of three days of losses for European stocks, which have particularly dented energy and technology shares. However, banking stocks gained on Thursday after Morgan Stanley analysts upgraded the sector.
• The U.K.’s FTSE 100 ended 0.6% lower, Germany’s DAX was down 1.7% and France’s CAC 40 fell 1.3%.
• Many sectors in Europe were down around 1.5%, including food and beverages and media. Auto stocks fell 1% despite data showing a rise in new car sales in the European Union for the first time in 13 months.
• Except for real estate stocks, all major sectoral indexes were in negative territory, with industrials, healthcare, and financials dragging the most.

How did Asian markets perform?

• Stocks in Asia fell on Friday, tracking Wall Street’s equities into the reds. Most indices in the region ended in weekly declines with growing expectations of hawkish moves by the Federal Reserve and fears of a global recession.
• In China, the Shanghai Composite was 2.3% lower, despite China’s industrial production and retail sales figures for August beating expectations.
• Heavyweight real estate stocks weighed the most on the Chinese index after data showed Chinese house prices fell at their worst pace in seven years.
• Losses in real estate stocks also spilled over into Hong Kong’s Hang Seng index, which shed 0.6%.
• India’s Nifty 50 index fell 1.1%, while the Taiwan Weighted lost 0.9%. Indonesian stocks tagged along with their Southeast Asian peers with a 1.7% drop.
• South Korea’s KOSPI index fell 1%.

Bonds and Commodities

• Treasury yields in the US retreated lower as US stocks fell with a revived notion amongst investors that slower growth will help the Federal Reserve tame inflation.
• After increasing to 3.924%, its highest level since 2007, earlier in the day, the two-year U.S. Treasury yield, a bellwether for interest rate expectations, fell.
• The yield curve inversion between the two-year and 10-year notes - seen as a recession harbinger - widened further before returning to Thursday’s closing level.
• The two-year’s yield last fell 0.4 basis points to 3.869% and the 10-year yield slid 0.6 basis points to 3.453%.
• Following a spill at Iraq’s Basra terminal, Oil prices rose slightly with fear the spill would lead to constraints on crude supply, but the commodity remained down for the week on fears rate increases would curb global economic growth and fuel demand.
• U.S. crude settled up 1 cent at $85.11 per barrel while Brent crude settled up 51 cents at $91.35.
• Gold prices rose on Friday as the dollar stalled, but gains in the greenback over the week and expectations of a sizeable U.S. rate hike kept bullion well below the key $1,700 mark and en route to its weakest week in four.
• Spot gold added 0.6% to $1,674.17 an ounce. U.S. gold futures gained 0.34% to $1,671.70 an ounce.

Currencies

• The greenback took a minor beating on Friday as the dollar index fell 0.1%, with the euro up 0.09% to $1.0008.
• Elsewhere in North America, the Canadian dollar fell to its lowest level in nearly two years against the greenback on Friday as the Canadian dollar was trading 0.3% lower at 1.3270 per U.S. dollar, or 75.36 U.S. cents, after touching its weakest since November 2020 at 1.3307. For the week, the loonie was down 1.8%, its biggest weekly decline since June.
• The Japanese yen strengthened 0.40% versus the greenback at 142.94 per dollar, while the Sterling was last trading at $1.142, down 0.38% on the day.
• In Africa, the South African rand was lower on Friday, as the rand traded at 17.6725 against the dollar, 0.48% weaker than its previous close.
• In cryptocurrencies, Bitcoin on Sunday dropped 1.54% to $19,804, slipping from the 20,000 mark after losing $310 from its previous close.
• The world’s biggest and best-known cryptocurrency is down 58.9% from the year’s high of $48,234 on March 28.
• Ether, the coin linked to the Ethereum blockchain network, dropped 3.2 % to $1,422.1 on Sunday, losing $47 from its previous close.