Weekly Market Briefing – Week Beginning 20/7/2020

As Investors wait cautiously for more positive economic data and developments on the vaccine, realism has set into markets. A sideways market continues rather than a V shaped recovery anticipated by optimists. Although the fear that dominated the markets this spring has eased off, it is unlikely that it would be “all over by Christmas”. Major current concerns boil down to the possibility of a second wave in winter and uncertainty arising from the US presidential elections, Joe Biden’s leftist policies are not as “market friendly”.

S&P500 is back to the same level as the start of the year while the tech-heavy Nasdaq made new records on the 20th July as a result of the Trump administration’s plans to implement more than $1 trillion to stimulate the economy. Meanwhile FTSE 100 is being hampered by reliance on big dividend payments to attract investors, companies focus on preserving cash at the expense of investors’ income. It emerged this week that pay-outs slumped by more than 50% in the three months from April to June. 2020 dividend yield is predicted to fall 39-43% as a whole according to link group, at between 3.3-3.6% still higher than interest rates, bond yields and deposit accounts. Some banks were forced by regulators not to pay dividends while other companies follow

Parallel negotiations took place in the EU summit. Europe’s leaders signed off a 1 trillion Euro long-term budget as well as agreement on the size of a package of an EU recovery fund. The creation of an EU recovery fund marks a step towards greater pooling of resources as well as an extension to the EU’s borrowing power in the financial markets as a group of ‘frugal nations’ compromise.

China’s real GDP grew by 11.5% on the previous quarter, suggesting a strong rebound in Q2. China has been the leader in easing lockdown measures and restarting economic activity, industrial producing rose to 4.8% y/y in June while recovery in retail sales recovered slightly slower. China’s economic outlook will also depend on the recovery of its trading partners as exports account for 1/5 of China’s GDP.

Source: BlackRock Investment Institute, with data from European Centre for Disease Prevention and Control. Notes: . Gold shows the highest grow in 2020 compared to selected assets.

Gold is standing at more than $1800 an ounce, rising more than 20% so far in 2020. Gold miners are the biggest winners due to their disproportionate gains as they have fixed costs while gold prices increase. Gold equities have risen much more than the underlying gold price at around 33%

Last week saw Banks across the Atlantic post solid Q2 earnings as the increased volatility boosted their trading arms and companies looking to raise funds through issuing equity and debt securities generating earnings for the banks’ corporate finance divisions. We can look forward to results from Coca Cola, Tesla, Microsoft, Intel, Unilever, Vodafone and more as well as purchasing managers’ index data across Europe and public finances and retail sales figures in the UK later this week.


Stevenson, T 2020, Market Week Podcast – Stock markets tread water, Fidelity Investments, viewed 22 July 2020,  <https://www.fidelity.co.uk/markets-insights/markets/global/market-week-22-07-2020/>

JP Morgan Asset Management, The Weekly Brief, JP Morgan Asset Management, viewed 22 July 2020, <https://am.jpmorgan.com/blob-gim/1383518158013/83456/MI%20-%20Weekly%20Brief.pdf>

Pyle, M, Bartsch, E, Thiel,S, Harasim, B, Weekly Commentary, BlackRock, viewed 22 July 2020, <https://www.blackrock.com/us/individual/literature/market-commentary/weekly-investment-commentary-en-us-20200720-bii-favoring-euro-stocks.pdf>

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s