Equity Markets

Asian Equity Market

Stocks bounced slightly after a relatively red Thursday. The bounce could be seen more strongly in China, where the HSI was up +1.30% while SHCOMP was also higher by +0.50%. Elsewhere, the Kospi rose +1.34%, clawing back some losses in the worst week since the mid-March losses. The Nikkei also edged higher by +0.17%.

European Equity Market

In Europe, the major indices closed lower on the day but off the lowest levels. The German DAX led the way to the downside at -0.51%, with the rest recording losses of under -0.40%. On the week, all lost ground, with Spain’s Ibex having the worst week at -2.6%.

US Equity Market

In the US, both the S&P 500 (+0.34%) and Nasdaq (+0.68%) closed at record highs led by Apple’s strong +5.14% move. Over the week, the Nasdaq led the way with a +2.65% gain, while the S&P rose +0.72%. Despite the strong performance in the S&P and Nasdaq, the volatility indexes, VIX and VXN, did not make new near-term lows. According to Goldman, short interest as a % of market cap is now 1.8%, the lowest it has been in 15 years. Amongst the S&P sectors, technology was the best performer at +1.3%, while energy lagged at – 0.6%.

Fixed Income

U.S. Treasury yields were mixed on Friday as the market drifted in light trading and looked ahead to next week’s Federal Reserve Jackson Hole virtual economic policy conference and $148 billion of note sales. Long-term yields were down -2.27-4.26bps while short term yields were up 0-0.21bps. This had the effect of flattening the US 2Y-10Y curve to 48.5bps. Core European government bond yields fell further. Germany’s 10-year Bund rate pushed back to -0.5% markings its 6th consecutive day of falls and longest falling streak since January.

Commodities

Once again, commodities traded largely the inverse of the dollar strength, with most falling on the session. Precious metals fell on the day, led by silver ‘s – 1.68% drop, while gold declined -0.35%. Looking at gold’s weekly chart, there was little recovery from the previous week’s bearish engulfing candle, possibly indicating that more downside would be likely. In base metals, copper dropped -1.68%, the worst performer in the complex as it retraced sharply from a breakout from 18-Aug. Nickel was the only metal to close positive, up +0.30%, though its daily range of $205 was the tightest since 08-Jul. In oil markets, Brent and WTI settled lower on the day, just slightly over -1%.

Currencies

The U.S. dollar on Friday gained after data showed a strong uptick in U.S, business activity. It gained against the euro for the first week since while the single currency was held down as an August batch of European business surveys pointed to a stuttering economic recovery. The dollar index was up 0.49% at 93.247. The euro dipped to a one-week low of $1.175 against the greenback earlier, before rising back to $1.1797, down -0.531% on the day. The greenback escaped a ninth consecutive weekly decline that would mark the longest losing streak since the summer of 2010. The pound was the biggest loser as it fell -0.94% at 1.309 on the back of bad news regarding the latest Brexit negotiation and broad-based gains for the US dollar

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