Number of Covid-19 cases globally rose from 14.5 million to 16.2 million over the week as the resurgence of the virus spread across the globe. Financial markets slid lower as investors’ focus turned towards safer haven assets, even pushing aside the tech-sector, which had previously done well with support from the “work-from-home” trend. Geopolitical tensions between the US, and China heightened after a “tit-for-tat” move saw consulates being ordered to close. Gold price continued its steady climb, gaining 5.04% last week as uncertainties continue to loom over global economies. 

 

In the News

  • Global markets were kept on its toes after a sudden rapid rise in the number of Covid-19 cases globally. There are now more than 16.2 million reported cases, and close to 650,000 deaths caused by the virus as we continue to scramble for a vaccine.
  • The US continues to grapple with the pandemic, and now has more than 4.3 million cases and close to 150,000 fatalities. Reopening plans have been pushed back as states desperately look for ways to curb the spread, whilst the federal government continue to urge for the reopening of schools.
  • Unemployment benefits of USD 600 per week in the US is also set to expire this week.  While there were talks that the benefits may be extended till the end of the year at a reduced rate of USD 100 per week, no confirmation has been made. How this would impact the US economy and the unemployed in the US will remain to be seen.
  • Attention was diverted momentarily as tensions brewed between the US and China after the US’ move to order the closure of China’s consulate in Houston was quickly retaliated with China’s own order to close the US’ consulate in Chengdu. The deteriorating relationship between the US and China put pressure on global financial markets as investors kept a watchful eye on the development between the two major economies. 
  • China’s equity market took a hit as rising tensions kept investors at bay. The Shanghai Composite Index slid 0.89%, while the CSI300 Index ended the week 1.21% lower. The consumption focused S&P New China Sectors Ex A Share Index fared better, shedding 0.88% and remains the best performer amongst the 3 with a 19.41% YTD returns in MYR terms. 0829EA ended the week with a 19.04% gain on a YTD basis, despite the dip of 0.87% performance last week.
  • The Malaysian domestic market saw support from glove stocks which has seen strong global demand for its products. The meteoric rise of glove stocks have also led to a spike in market capitalisation for the local bourse, closing the gap with its Singapore counterpart. The Dorsey Wright Technical Leaders Malaysia Index, which is tracked by the 0836EA, rose 1.77% last week, outperforming the broader KLCI Index which recorded a -0.42% return over the same period. 
  • Gold price jumped over the week to a new high in 9-years as uncertainties continue to loom over markets. The LBMA Index was the strongest performer last week after rising 5.04% in MYR terms. The 0828EA continued its climb higher with the rise in Gold price, and now has a YTD gain of 28.75% in MYR terms.

 

On the Economic Data Front

  • Mixed economic data points from the US
    • Jobless claims rose to 1.41 million, from the previous week’s 1.31 million. This marked the 18th consecutive week that claims were above 1 million.
    • US new home sales numbers surge in June by 13.8% to 776,000 – its fastest rise in 13-years, said to be attributed to the lower mortgage rates.
  • EU leaders agree on stimulus
    • EU leaders agree on a EUR 750 billion stimulus plan – enabling the EU to raise funds from the capital markets on behalf of its member.
    • Flash Eurzone PMI rose to 54.8 in July, a healthy jump from the 48.5 reading in June after improved numbers from both the manufacturing, and service sectors.

 

ETF strategies at TradePlus

 

A look at the performance of the TradePlus ETFs, and major global indices

 

 

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