The world added over 2 million new COVID-19 cases last week, with total number of cases now over 46.8 million. Multiple parts of the EU went into lockdown amid a surge in COVID-19 cases, which has now surpassed the 10 million mark. US indices saw its worst weekly dip since March, as the effects of various uncertainties outweighed the better-than-expected earnings results and GDP reports. Local markets trailed the negative global sentiment in the week, as local indices were further dragged down by political uncertainties and budget concerns. Gold was also not spared, ending the week below the USD1,900/oz level.
In the News
- COVID-19 cases increased by over 2 million last week, as the rate of daily infections continue to accelerate across the globe. There are now over 46.8 million cases, with 1.2 million deaths.
- Europe surpassed 10 million cases of the coronavirus yesterday, recording half of its cases within a month. With the rising rate of infections, the UK, France, and Germany have implemented lockdown measures as an effort to curb infections.
- In the US, GDP reports for the 3rd quarter beat analysts’ expectations of around 31%, as the US economy recorded a GDP expansion of 33.1% (QoQ annualised), recovering from the 31.4% dip in the last quarter.
- With US elections happening this week, hopes for a pre-election stimulus package turns unlikely, but talks are expected to continue after the elections on Tuesday (3/11).
- Earnings reports continued last week, with a reported 86% of companies reporting earnings that exceeded expectations. However, sentiment was heavily weighed down by diminishing hopes for stimulus aid and rapidly rising pandemic numbers, as US indices suffered its second straight week of losses, posing steepest weekly declines since March.
- All major indices closed in the red last week, with the S&P 500 recording losses of 5.73% throughout the week, while tech heavy Nasdaq posed losses of 5.60% in MYR terms.
- Several of the major tech giants reported their earnings last week, with Facebook, Alphabet (Google), Amazon, Twitter and Amazon reporting better than expected earnings last quarter. However, stock prices continued to dip despite the news, causing the FANG+ index to dip 6.02% throughout last week. The 0831EA, which provides a -100% exposure into the index, ended the week 5.49% in the green , benefitting from the declines in the market.
- Chinese officials met for the Fifth Plenum of the 19th Party Congress last week to discuss the proposals for its next 5-year plan. The proposal stressed the importance of innovation and a push to reform the market via new economy industries, targeting higher spending for education and technology sectors such as 5G, AI and data centers.
- Major indices in China trailed the negative sentiment in the US, with the CSI300 Index shedding 0.67% while the Shanghai Composite Index dipped 1.80% in MYR terms over the week. The S&P New China Sectors Ex A Share Index dipped 0.85% last week while the 0829EA dipped 0.69% last week. The ETF is still posting YTD gains of 29.46% in MYR terms, and has announced its first income distribution last week.
- Locally, negative global market movement and various uncertainties such as rising case numbers, concerns over Budget 2021 and local politics also weighed down local markets last week. Over the shortened trading week, the FBM KLCI experienced a steady decline, posing weekly losses of 1.86%. The momentum-focused Dorsey Wright Technical Leaders Malaysia Index saw impacts brought on by high volatility in the market, dipping 2.37% over the week while the TradePlus DWA Malaysia Momentum Tracker (0836EA) ended 1.58% in the red.
- Despite the uncertainties, Gold price was also not spared from the negative sentiment in the market, dipping 1.92% throughout the week to end at USD1875/oz as the Dollar strengthened. The TradePlus Shariah Gold Tracker (0828EA), which tracks the Gold price index dipped 1.84%. The ETF is still recording YTD gains of 23.79% in MYR terms.
On the Economic Data Front
- US continues to see positive economic data:
- US 3rd quarter GDP records 33.1% (QoQ annualised) expansion, exceeding analyst’s expectations.
- Weekly jobless claims fell to the lowest since the pandemic started, while continuing claims continue its accelerated decline.
- Data for durable goods orders showed better than expected results in September, while core capital goods orders reached 6-year highs.
- EU reports mixed economic data:
- Eurozone GDP estimates show estimated growth of 12.7% in the third quarter, beating expectations.
- ECB leaves monetary policy unchanged, but signals possible additional stimulus by the end of the year.
- Consumer prices dipped for the second straight month, reporting a decline of 0.3% Y-o-Y.
- Chinese economic recovery outpaces the world:
- Industrial sector profits recorded around 10% growth in September from last year.
- Manufacturing PMI surpassed expectations, recording at 51.4 in October.
- Services PMI for October recorded at 56.2, an increase from 55.9 last month.
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