The pandemic remained at the forefront of news headlines as infection cases surged rapidly, with 2 million new cases recorded globally last week. US Fed Chair Jerome Powell warned of the potential negative impacts that the economy could face in the absence of additional fiscal stimulus. Hopes of a stimulus, along with optimism surrounding the vaccine development then boosted the US market to a 3-month high. Most major equity markets trended higher over the week as risk appetite returned, leaving the safe haven Gold to lose some ground.

 

In the News

  • The rate of pandemic infection cases is not slowing down. The world recorded another 2 million cases last week, bringing the total to 27 million cases as more countries are faced with a resurgence of the virus. 
  • Spain’s government declared a state of emergency in Madrid, while the surge in cases in the UK put the country in its “tipping point”.  
  • In India, the number of cases has surpassed the 7 million mark, as the country added a million cases in the last 13 days. India is only second to the US in terms of infection cases, in which the latter is now approaching the 8 million mark.
  • In the US, President Trump declared that he had recovered from the coronavirus on Monday (4/10), attributing his recovery to new antibody and antiviral treatments, while pharmaceutical company Eli Lilly has announced its plans to seek emergency authorisation for its antibody therapy, with plans to have 1 million doses ready by the end of this year. 
  • US Fed Chair Jerome Powell has warned both the Congress and the White House, stating that “overdoing” on fiscal stimulus would have lesser impact than not providing enough coronavirus-related economic relief. 
  • Hopes of refreshed stimulus talks were reignited despite conflicting signals, as latest developments show that while the White House is prepared to up its offer to USD 1.8 trillion, President Trump has announced that he was prepared to go even higher than the Democrat’s proposed USD 2.2 trillion, days after tweeting that he has asked representatives to halt negotiations. 
  • Renewed hopes of a fiscal stimulus and positive vaccine news saw the S&P 500 index recording its best weekly gain since July, ending the week 3.18% in the green in USD terms. Positive market sentiment also spilled over to the technology sector, as tech-focused Nasdaq also posted its best week since July, gaining another 3.89% from last week.
  • The FANG+ index saw gains of 2.95% while the 0830EA, which provides a 2x leveraged exposure into the index, ended the week with an impressive 7.35% gain. The ETF’s YTD gains currently stands at 113.53% in MYR terms.
  • It was a short trading week for China as the country continued its week-long “Golden Week” holiday in celebration of its national day.
  • With no domestic infections reported in the country since 15 August, domestic travel saw a boost during the holidays as travel restrictions were completely lifted within the country.
  • According to ministry data, China’s National Day holiday generated approximately RMB466.56 billion worth of revenue throughout Golden Week, as domestic tourists totalled at 637 million, accounting for almost half of the country’s population.
  • The rebound in consumption in the country has signalled a shift in the recovery from the pandemic from state-led investment, in line with China’s aim to shift its economic focus to its new economy, to boost domestic demand amid an increasingly uncertain international environment.   
  • The S&P New China Sectors Ex A Share Index, which includes companies and sectors that are aimed to boost consumption in the country surged 3.97% higher over the week, outperforming the country’s broader indices with the CSI300 Index gaining 3.07%, while the Shanghai Composite Index upped 2.72% over the week in MYR terms. This contributed to the 0829EA’s gain of 3.63% over the same period.
  • Local markets were cautions amid rising uncertainties, keeping eyes on the rising number of coronavirus infections in the country, as multiple regions in the country were put on stricter lockdown measures as clusters continued to emerge. 
  • Politics were also in focus as opposition leader Anwar Ibrahim is set to meet with the King tomorrow (13/10) to substantiate his claim of having majority in parliament.
  • Trailing the positive sentiment in the US, the FBM KLCI ended the week mixed with a gain of 2.00%, while the momentum-focused Dorsey Wright Technical Leaders Malaysia Index to gained 1.74% amid various uncertainties. The Index, which is tracked by the TradePlus DWA Malaysia Momentum Tracker (0836EA), gained 1.69% over the week.
  • Gold price dipped marginally throughout the week, closing the week at USD 1,912/oz. The TradePlus Shariah Gold Tracker (0828EA), which tracks the Gold price index slid 0.43%. The ETF has gained 25.60% YTD in MYR terms. 

 

On the Economic Data Front

  • US jobless data shows slowing economic recovery:
    • Initial jobless claims fell less than expected, recording at 840,000. 
    • Continuing claims on the other hand fell sharply, recording at 10.0 million from the expected 11.0 million.
    • Reports show that only half of the jobs loss amid the pandemic has been recovered.

  • EU economies continue to recover at slower pace:
    • Spike in case number across the region has triggered local lockdown measures. 
    • UK’s GDP rose 2.1 in August, less than half the consensus of estimates.
    • The French economy rebounded 16% in the 3rd quarter from an almost 14% contraction in the previous quarter.
    • UK and EU steps up meetings for its port-Brexit relationship ahead of the summit for EU leaders next week.

  • Chinese economic data signals further recovery:
    • Private services PMI shows 5th consecutive month of growth, recording at 54.8.
    • Daily consumer spending during the “Golden Week” holiday rose 4.7% from last year.

 

ETF strategies at TradePlus

 

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

 

 

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