Market Daily Update – 26th August 2020

What's Moving Markets

Equity Markets

Asian Equity Market

In Asia, the Nikkei closed +1.35% up to its highest level since February, bouncing off positive sentiment from US-China trade talks. The optimism also spilled over to the Kospi, which was up +1.58%. However, in China, the SHCOMP fell -0.36%, while the HSI edged lower by -0.26%.

European Equity Market

European indices gave up gains towards the end of the session. The UK’s FTSE 100 closed lower by -1.11% after trading as high as +1.1%, as the strong pound weighed on the index. The German DAX traded just slightly over positive, after being up +1.2% on the day. The laggard was Italy’s FTSEMIB, declining -0.41%.

US Equity Market

In the US, both the S&P 500 (+0.36%) and Nasdaq (+0.82%) closed at record highs once again, despite more waning volumes. Despite the strong performance in the S&P and Nasdaq, the volatility indexes, VIX and VXN, have not made new near-term lows. The bond MOVE index has now moved to mid-July levels when the VIX traded at 28. Amongst the S&P sectors, communications was the best performer at +0.9%, while energy lagged at -1.4%.

Fixed Income

Longer-term U.S. Treasury yields were higher on Tuesday and a closely watched part of the yield curve steepened as investors moved into riskier assets on trade hopes and a solid auction of 2-year notes. Long-term yields were up 2.93-3.76bps while US 2Y yield was down -0.2bps. This had the effect of flattening the US 2Y-10Y curve to 48.5bps. Euro government bonds suffered through their worst session since May as fixed income fell out of favour as German data and optimism on U.S.-China relations boosted risk appetite. 10Y bund yields were up 6bps and Italian 10Y yields rose 8.2bps while other euro govies yields were up around 5bps.


The dollar’s weakness was not translated into precious metal strength, as both gold and silver was down for a 3rd day in a row. Gold was marginally lower by – 0.04%, while silver was down -0.27%. In base metals, zinc was the outperformer on the day at +1.4%, with most other metals settling just slightly higher. Nickel stopped just shy of USD15,000/mt, as it closed for a 2nd day above the 50% Fib of the highs in Sep 2019 and the Mar 2020 lows. In oil markets, there was some movement in both WTI (+1.71%) and Brent (+1.62%), as Hurricane Laura shut down most of US offshore production along with gulf coast refineries.


The dollar dipped on Tuesday as investors waited on comments from Federal Reserve Chairman Jerome Powell on Thursday about the U.S. central bank’s policy framework review, and after data showed improving German business morale. The dollar index was down -0.30% at 93.019. The pound was the biggest winner on the dollar weakness as it rose 0.68% despite an unexpected drop in Britain’s retail sales data. The euro gained 0.4% to 1.1835 dropping from May 2018 high of 1.1965 hit on Monday. The Australian Dollar rose 0.45% against the dollar to 0.7195 on improved risk appetite as the dollar rose 0.39% against the safe-haven yen.

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