Number of Covid-19 infection cases continued its rapid rise last week, and has now surpassed 18 million cases at the time of writing, with almost 690,000 deaths. Global financial markets ended the week in a mix despite the tech sector regaining its upward trend post the release of strong earnings results. The uncertainties that have continued to hover over global markets drove investors to seek refuge in Gold, whose price leaped to close to USD 2,000 per ounce last week.

 

In the News

  • Covid-19 infection cases have continued to rise at a rapid speed, and has now topped 18 million cases globally, with close to 690,000 deaths. The highest number of cases remain concentrated within the US, with close to 4.8 million infection cases being reported, and more than 157,000 deaths. 
  • As the US continue to scramble to contain the spread of the virus, states have reversed its reopening decision and kept businesses closed. The unemployment benefits of USD 600 per week ended at the end of July, with no news of an extension as the Democrats and Republicans continue to debate over the next course of action, leaving many Americans in limbo. 
  • Increased measures are also being taken globally on the back of resurgence fears. Germany and France have both put in place mandatory testing for travellers going into the country from high-risk areas. UK, whereas, imposed lockdowns in the north of England as cases rise. 
  • Global financial markets were put under pressure on fears of a resurgence, while the relationship between the US and China continue to deteriorate (Read more about this here). Markets had ended mixed amidst concerns surrounding the pace of which global economies will take to recover from the current environment.
  • Tech stocks were again thrust into the limelight after impressive quarterly earning reports were released. The tech- giants, namely Amazon, Apple, and Facebook reported better-than-expected 2Q earnings results, and contributed to the boost in market performance towards the end of the trading week. Over the week, Amazon rose 5.18%, Facebook saw its share price rise by 9.95%, whilst Apple gained an impressive 14.73% in local currency terms.
  • The 3 tech-giants, which make-up 30% of the NYSE FANG+ Index helped the Index rise 2.64% last week. The Index is tracked by the 0830EA, which rose 3.3% in MYR terms over the same period.
  • Investors rejoiced on news that Apple was looking to perform a share-split, making owning Apple stocks more affordable after hitting an all-time high on Friday. Investors will be receiving a 4-for-1 stock split. 
  • China’s equity market also rallied last week, ignoring the concerns rising from the US-China tensions, and flooding problems across central China.  The generally stronger macro data flowing out of China had boosted investors’ sentiment, and stronger PMI reading marked an expansion for the 5th consecutive month, putting up signals that the economy was back on track. 
  • The Shanghai Composite, and the CSI 300 Index both rose 4.27%, and 3.61% respectively in MYR terms last week. The consumption-centric S&P New China Sectors Ex A Share Index, whereas, rose at a slower pace of 1.16%. The 0829EA which tracks the Index has seen its NAV gain 19.04% on a YTD period. 
  • On the domestic front, the Malaysian market continues to be plagued by political uncertainties, with the latest rift between key coalition parties causing investors to a more cautious view on the local bourse. The domestic KLCI rose a marginal 0.89%, whilst the momentum-focused Dorsey Wright Technical Leaders Malaysia gained 3.92% over the same period. The 0836EA, which tracks the said Index rose 3.64% over the week.
  • Gold price leaped to its 9-year high last week, with analysts forecasting the precious metal to hit the USD 2,000 per ounce mark as demand for Gold spike amidst the uncertainties. Gold ended the week at USD 1,974.70 per ounce. The LBMA Index rose 3.71% last week, and remains one of the best performers over the year. The 0828EA has seen its NAV gain 28.75% YTD in MYR terms.  
  • Oil price saw headwinds from the sluggish global growth environment, leaving oil price to slide 2.64% lower after closing at USD 40.27 per barrel on Friday.

 

On the Economic Data Front

  • Drastic effects of the pandemic on the US economy:
    • Impact from the virus became more apparent when 2Q GDP was released - contracting by 32.9% YoY. 
    • Jobless claims continue to be above 1 million, rising last week to 1.43 million.
    • Encouraging data was however seen from the housing sector, as pending home sales rose in June (the 1st time in 4-months).
    • Manufacturing data signalled recovery with durable goods orders rising by 7.3% for the month.
  • EU sees weakness in 2Q, boosts stimulus measures:
    • Corporate earnings were weak, largely dragged down by financials. 
    • Germany’s GDP shrank 10.1% QoQ.
    • France’s economy retracted by 13.8% over the quarter as more restrictions were put in place.
    • Italy set to increase its stimulus package to EUR 32 billion to cushion the pandemic impact.
  • China’s economy sees another month of improvement:
    • July’s manufacturing PMI exceeds expectations, and rose to 51.1.
    • Non-manufacturing PMI slid marginally lower to 54.1 from its previous month’s reading of 54.4 – staying firmly in expansionary territory. 
    • New orders rose 0.3% to 51.7 on the back of improved export orders which surged 5.8%.
    • Profits in the industrial sector for June leaped to 11.5% YoY, from the May’s reading of 6%.

 

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

 

 

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