13th – 20th August 2021
Weekly Market Update
European shares drew back for the week amid global concerns about the spread of the delta variant of the coronavirus, the situation in Afghanistan, and slowing growth in China. After reaching a series of record highs in the first two weeks of August, the pan-European STOXX Europe 600 Index ended the week 1.48% lower in local currency terms. Country specific indexes also declined. France’s CAC 40 Index fell 3.95%, Germany’s Xetra DAX Index was off 1.14%, Italy’s FTSE MIB Index dropped 2.78%, and the UK’s FTSE 100 Index retreated 1.84%.
Core eurozone bond yields drifted lower in the week, as investors opted for lower-risk assets. Germany’s 10-year bund yield was trading around -0.495% on Friday, compared to highs of -0.456% on Monday. In currency markets, the British pound and the Euro both weakened against the U.S. dollar, as the dollar profited from the risk-off environment.
US Stocks pulled back for the week, but not before the S&P 500 Index reached a record high of 4,480 on Monday afternoon, more than double its intraday low of 2,192 on March 23, 2020. Small-cap stocks lagged for the week, with the Russell 2000 Index briefly falling into correction territory, down more than 10% from its March 2021 peak. More signs emerged of an economic slowdown in China, and Securities and Exchange Commission Chair Gary Gensler urged caution when investing in Chinese stocks because of regulatory uncertainty and disclosure issues.
U.S. Treasury yields decreased through most of the week, with the yield on the benchmark 10-year Treasury note touching its lowest level since August 5.
Japan’s stock markets ended the week sharply lower, with the Nikkei 225 Index falling 3.45% to close at its lowest level this year. The broader TOPIX Index was down 3.03%. The yield on the 10-year Japanese government bond ticked down to 0.01%, while the yen finished the week broadly unchanged at around JPY 109.7 against the U.S. dollar.
Chinese stocks plunged as Beijing’s regulatory clampdown on the technology sector stirred uncertainty about what other sectors the government could target next. Liquor stocks dropped after state media reported the State Administration for Market Regulation was considering new regulations for liquor companies. Health care companies fell on worries that new regulations would also curb industry profits.
For the week, the Shanghai Composite Index fell 2.5%, while the CSI 300 Index of large-cap stocks shed 3.6% to its lowest close since July 28, according to Bloomberg. In Hong Kong, the benchmark Hang Seng Index fell into a bear market, losing more than 20% from its peak earlier this year. As of Friday, stock markets of China and Hong Kong lost more than USD 560 billion in market value, according to Reuters.
The Renminbi currency hit a three-week low of 6.5059 against the U.S. dollar on Friday, weakening past its 200-day moving average and the psychologically key level of 6.50 Renminbi per dollar. In the bond market, the yield on the 10-year government bond declined three basis points to close at 2.87%.
Oil prices had their biggest week of losses in more than nine months, with another fall on Friday. Brent crude fell 8%, settling down $1.27, or 1.9%, to $65.18 a barrel, its lowest since April, and down about 8% for the week. US West Texas Intermediate (WTI) crude for September settled down $1.37, or 2.2%, to $62.32 a barrel on Friday, to lose more than 9% for the week.
Gold prices edged higher and closed up 90 cents to $1,784.00 per ounce on Friday afternoon. Copper rose more than 2% to $4.13 a pound, and then rose in after-hours trading to $4.15 a pound.
Lawsons Equity – Financial Planners Malta
Lawsons Equity Limited is a company registered in Malta with company number C49564 and licensed by the Malta Financial Services Authority as Enrolled Insurance Brokers under the Insurance Intermediaries Act 2006, and to provide Investment Services under the Investment Services Act, 1994. Lawsons Equity Ltd have passported their services across the EU. To see a full list of countries, click here.