The upward trend for technology stocks slowed down last week after investors locked-in gains amidst rising uncertainties. Optimism that we are now one-step closer to finding a vaccine for the pandemic did, however, boost sentiment despite the continuous rise in cases globally. Heightening fears of a second wave kept investors at bay, leaving global financial markets to end last week on a mixed note.

 

In the News

  • Concerns surrounding the rapid rise in pandemic cases continue to cast its shadow as global cases now top 31 million infected cases. While the US gradually creeps towards the 7 million mark, India sparked concerns when case numbers jumped, recording more than 2,000 cases in a single day.
  • The WHO also announced that the EU was facing a serious situation after its weekly numbers hit 300,000 for the 1st time and advised against reducing the length of its quarantine period.
  • France was advised to consider a 2-week lockdown to coincide with its schools’ holiday period, while England looks to tighten restriction measures further.
  • Sentiment was boosted with optimism that we were closer to reaching a vaccine when drug companies separately announced that it was resuming trials, and were looking to start distributing a vaccine before the end of the year. 
  • After a 2-day policy meeting, the US Feds concluded that it would be maintaining its near 0% interest rates until 2023 as it anticipates economic growth to contract this year due to the pandemic.
  • While Fed Chair Powell reiterated the need for stronger fiscal intervention to assist with the economic recovery, worries brewed as to the effects of the Fed’s policies, and whether the policies rolled out have reached its limit in meeting its objective.  
  • Japan saw Yoshihide Suga being voted in as Japan’s new Prime Minister as he replaced Shinzo Abe who vacates his post amidst his deteriorating health.
  • Over in China, equity markets remained robust as investors looked forward to more stimulus measures to be released by the PBoC to address the impact of the pandemic. 
  • Concerns over the trade tensions between China and the US were cast aside in the interim, leaving the Shanghai Composite to rise 2.40%, whilst the CSI300 index rose 2.39%. The dip in performance of tech-related names caused a drag for the New China Economy, leaving the S&P New China Sectors Ex A Share Index to lag the broader market with its gain of 0.47%.
  • After being the first country to recover from the pandemic, the OECD expects China to be the only country to see positive economic growth this year while its counterparts slide into recessionary status.
  • The broader domestic Malaysian market ended the week marginally higher, gaining 0.12% over the week. Stronger performance of key names helped push the momentum-focused Dorsey Wright Technical Leaders Malaysia Index 3.13% higher, outperforming the broader market. The Index, which is tracked by the TradePlus DWA Malaysia Momentum Tracker (0836EA), benefitted from the rise and gained 2.17% over the week.
  • The erratic movement of global financial markets kept Gold price at bay, leaving the precious metal to end the week marginally flat. Nevertheless, the precious metal remains one of the strongest performing asset classes to date, allowing the TradePlus Shariah Gold Tracker (0828EA), which tracks the Gold price index, to have spiked 27.32% in MYR terms this year. 

 

On the Economic Data Front

  • US saw mixed economic data:
    • Core retail sales dip, heightening concerns that the expiration of the US’ extended unemployment benefits may be trickling down into the economy
    • Weekly jobless claims hit new low at 860,000
    • Home data was mixed, with encouraging data flowing out of the single-family homes segment.

  • UK considers negative interest rates:
    • As expected, the Bank of England left its policy measures unchanged.
    • The central bank indicated that it would be looking into the mechanics of negative interest rates. 

  • China proves to have gotten its economy back on track:
    • Retail sales rose 0.5% YoY – seeing its first YoY growth this year when retail sales totalled USD 495 billion in August. 
    • August’s industrial production numbers rose better than expected when it spiked 5.6% YoY, slipping marginally from the 5.7% seen in July.

 

ETF strategies at TradePlus

 

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