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The global markets were under the spell of key economic readings - Weekly Review, August 31 – September 4

Miguel A. Rodriguez
Miguel A. Rodriguez
14 September 2020
A week full of major economic readings that painted a picture of the state of the economies

Monday: The American markets didn’t budge over the fact that the Food and Drug Administration was fast-tracking three possible #COVID-19 vaccines. USA30 lost 0.78%, while USA500 traded 0.225 lower. 

The Dollar Index reached the lowest level in more than two months, trading at 91.99.

Japan225 gained 1.89% after the search for a new prime minister has started.

New Zealand stock exchange underwent multiple cyber-attacks, which caused it to halt trading for numerous days during the past week. The attacks allegedly have been caused by a syndicate looking to extort bitcoin from money transfer services such as Venmo and PayPal. The bourse managed to resume its activity, and following the news, NZD/USD lost 0.21% to 0.6729.

The French Veolia is looking for a possible takeover of Suez, a subsidiary of Engie. It is looking to purchase 29.9% of Suez, the endpoint being a merger between them. The deal is valued at about €2.9 billion, the deal being on the table until September 30. The European market reacted positively to the news, and Veolia and Engie stocks gained more than 6% each.

BlackRock became the first asset manager in the world to receive approval from the Chinese Securities and Regulatory Commission to open a subsidiary in Shanghai. Upon the news, the company’s stock price gained 0.12%. 

Tuesday: Key economic readings made the markets move. Japan225 lost 0.25%, although the Purchasing Managers' index reached 47.2 from a previous 46.6. 

Australia200 traded 2.71% lower ahead of the Reserve Bank’s policy decision. 

Facebook news sharing feature will be banned in Australia if the Australian Competition and Consumer Commission's regulations will be enacted. The possible laws are a response to Facebook's reluctance to pay publishers for the posted content. The news didn't have much impact on Facebook stock price, it lost 0.16%, but it managed to top the losses, gaining more than 1% during Tuesday’s trading session. 

Zoom thrived during the pandemic considering the earnings it had during Q2. It posted a revenue increase of 355% to $663.5 million, compared to last year's figures. Also, the number of users increased by 458% compared to the same time the previous year. Following the report, Zoom stock price gained 22%.  

The unemployment rate in the Eurozone rose again, as data from Eurostat showed. For the 19 member countries, the figures came in at 7.9%, higher than the 7.7% previously reported. 

EUR/USD marked two-year high trading at 1.1995. Europe50 lost 0.66%. 

Wednesday: Oil prices traded lower after the Energy Information Administration report showed that the inventories have shrunken by nearly 10 million barrels. Brent Oil lost 2.83% to $44.29 a barrel, while Oil fell 3.32% to $41.34.

Australia entered its first recession in almost three decades. The country’s economy contracted by 7% in Q2. According to specialists, the contraction would have been far worse if the Reserve Bank wouldn’t have deployed a $147 billion fiscal stimulus. AUD/USD traded at 0.7368. 

Facebook and Twitter were able to close multiple fake accounts guilty of conducting misleading campaigns and spreading false information about the current Democrat candidate to the US presidential elections, Joseph Biden. Twitter stock price gained 1.4% after the news. 

Macy’s posted mixed Q2 figures. On the one hand, its same-store sales fell 34.7%, more than the 18.7% expected. While on the other hand, it reported a 53% increase in digital sales. Upon the news, the company's stock price gained over 5%.  

Thursday: The fact that France announced a stimulus package and that Germany will suspend for another year the debt limit made European markets trade higher. France40 closed up 1.8%, and Germany30 was up 1.6%.  

EUR/USD added 0.54% to 0.8924. 

GlaxoSmithKline and Sanofi are ready to start the human trials for their potential COVID-19 vaccine. More than 400 people will take part, and if everything goes well, the first results will be available by December. After the news, the companies’ stock prices gained more than 1%. 

The American clothing brand Guess posted lower-than-expected Q2 figures. Its revenue fell 42% to $399 million. During the quarter, it lost $20.4 million, or 31 cents/share. It managed to reinstate the $11.25 dividends per share. After the report, the stock price traded 25% higher.

The US #unemployment claims came better-than-expected, at 881,000, showing an improvement in the labor market. The American benchmarks reacted mixedly: USA500 lost 0.45%, while TECH100 slipped 1.1%. 

Friday: Facebook and Pinterest announced that no new political ads would be posted in the final week of the presidential campaign. The latter is strengthening its two-year-old policy of forbidding political ads. The market wasn't too happy over the statements, so Pinterest lost more than 7%, and Facebook stock price lost more than 3%.

The week ended with positive news from the US Bureau of Statistics. The latest report showed that the non-farm payrolls increased by 1.371 million in the past month. At the same time, the unemployment rate dropped to 8.4% from a previous of 10.2%, topping the 9.8% forecasted. 

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Miguel A. Rodriguez
Miguel A. Rodriguez

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books.