Resurgence of the COVID-19 virus pushed global cases above the 35 million mark, as economies look towards targeted lockdowns in a desperate move to contain the spread. Heightened uncertainties brought on by the virus spread and political news left markets in limbo, though tech-related names did end the week on stronger footing. While most commodity prices slumped over the week, safe haven Gold gained and climbed back to the USD1,900 per ounce range.

 

In the News

  • Global news portals went into a frenzy after President Trump tweeted to inform the public that him and the First Lady tested positive for the coronavirus on Friday (2/10). 
  • Economies globally were on high alert on the back of a rapid spread in number of cases, which are now over 35 million, leaving the EU region to implement stricter containment measures to manage its hospitals’ capacity.
  • Last week saw the start of the US Presidential debate, which did not end well for President Trump with some labelling it one of the worst debates seen in the country. 
  • Polls have shown that public opinion is swinging in Biden’s favour, as margins widened in 2 of the largest battleground states of the presidential election. 
  • With effects of the pandemic taking its toll on the economy, the democratic-led US House of Representatives, after much wait, narrowly passed a USD2.2 trillion stimulus package but failed to get the backing from the House Republicans. Instead, the White House announced a relief package for its airline industry after United, and American airlines announced plans to collectively cut 32,000 jobs.
  • Despite the swirling uncertainties, most major indices ended the week higher with the US S&P 500 index reversing 4 consecutive weeks of losses, ending the week 1.34% in the green.
  • The FANG+ index continues to outperform the broader indices, locking in gains of 2.29%, as compared to the broader tech index Nasdaq, which gained 1.31% throughout the week. The 0830EA, which provides a 2x leveraged exposure into the index, jumped another 4.27% over the week. The stellar performance of the tech sector has allowed the ETF to lock in YTD gains of 98.91% in MYR terms.
  • China’s trading week was cut short as markets close for its week-long “Golden Week” holiday started on Thursday (1/10).
  • With international travel bans still underway, many Chinese consumers have resorted to domestic travels during the “Golden Week”, while domestic consumption is also expected to receive a boost with conjunction to the holiday. Analysts are putting their focus on domestic travel data and e-commerce numbers as a gauge to consumer sentiment in the country. 
  • The expected surge in domestic travels and consumption is beneficial to the New China Economy as consumer demand is redirected to local market as the pandemic restricts travel. 
  • The 0829EA/EB, which tracks the S&P New China Sectors Ex A Share Index is expected to be a beneficiary of this surge. Over the shortened trading week, the Index outperformed its peers, gaining 1.46%, while the CSI300 Index and the Shanghai Composite Index posed marginal gains of 0.47% and 0.04% respectively in MYR terms.
  • Locally, market volatility rose sharply as Malaysia recorded triple-digit cases for 4 consecutive days, with a record highest daily case number of 317 reported on Saturday (3/10), with new clusters reported across the country.
  • The local healthcare sector, mainly glove counters, saw large gains throughout the week after news of the US President’s diagnosis of the virus coupled with a spike in local infections.
  • The FBM KLCI dipped 0.59% throughout the week, whilst the Dorsey Wright Technical Leaders Malaysia Index ended the week 1.81% in the red due to strong volatility brought on by various uncertainties. The TradePlus DWA Malaysia Momentum Tracker (0836EA), which uses the index as a benchmark dipped 2.01% over the week.
  • Crude oil prices reversed its positive trend last week to end 7.76% lower, attributed to the low demand in transportation fuels, which put pressure on broad consumption of the commodity.
  • Gold prices recorded its best weeks in 2 months, closing the week at USD1,903/oz amid the US President’s bombshell announcement, coupled with uncertainties brought on by rising case numbers and stalled stimulus talks.
  • TradePlus Shariah Gold Tracker (0828EA), which tracks the Gold price index, ended the week 1.74% in the green while the ETF has posed YTD gains of 26.14% in MYR terms.

 

On the Economic Data Front

  • US economic data mixed, signals recovery slowdown:
    • The US economy managed to add 661,000 jobs in September, below expectations of 850,000.
    • Government hiring fell by 216,000 amid fiscal stresses in states & local governments.
    • Workforce participation rate fell from its post-pandemic high in August, recording at 61.4%.
    • Weekly jobless claims fell to the lowest since the pandemic at 837,000 filings.

  • Eurozone reports weak economic data as governments control virus resurgence:
    • Countries across the region are imposing targeted measures to curb infections.
    • EU and UK continue trade talks, as UK parliament members approved a draft law to create an internal market as a post-Brexit transition.
    • The bill contains breaches to the withdrawal accord agreed to last year, prompting action from the European Commission.
    • Consumer prices in the Eurozone fell for a second straight month in September, as year-over-year inflation rate hit its lowest in 4 years.

  • Chinese economic data signals that recovery is on track:
    • Manufacturing PMI reading recorded at 51.5 in September, above analyst’s expectations of 51.2, up from its August reading of 51.0.
    • Official services PMI for September hit its highest level at 55.9, the strongest since Nov 2013, as compared to 55.2 in August.

 

ETF strategies at TradePlus

 

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

 

 

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