Equities gain ground, above expectations earnings, lack of workers in the US: our top 10 stories of the week

Read the top 10 stories to remember the week which ended August 13th.

 

  1. US equities keep gaining ground

Both the S&P 500 and the Dow rose slightly over the past week, while the NASDAQ posted a slight decline. The S&P 500 even reached its 48th closing record high of 2021 on Friday. Most sectors advanced, mainly led by materials. Value stocks outperformed their growth counterparts. Information technology stocks lagged as the semiconductor supply keeps putting pressure on memory prices.

 

  1. An outstanding quarterly earnings season blowed up records

The quarterly earnings season that is about to wrap up is expected to beat records with so many companies smashing Wall Street’s expectations. As of Friday, no less than 87% of S&P 500 companies posted earnings beating estimates, the highest so called beat rate since FactSet started to record the data in 2008. The average over the past 5 years has been 65%.

 

  1. Help wanted, we need workers

Job openings keep rising, especially in the US where they rose by 590,000 to 10.1 million in the last monthly count, setting up a new record and beating economists’ expectations. There are now more job openings than unemployed Americans on the market, sign of a very tight labour market.

 

  1. Waning confidence about the economic recovery

US consumers are increasingly anxious about the economic recovery due to the spread of the Delta variant. The university of Michigan recently posted a consumer survey showing a sharp decline in confidence, sending the index at its lowest since December 2011.

 

  1. Mixed inflation reports

Although U.S. consumer prices continue to rise at a much faster pace than they have in recent years, the rate of acceleration moderated in July and was in line with economists’ expectations. The Consumer Price Index rose 5.4% compared with the same month a year earlier, but July’s increase was lower than June’s rise on a seasonally adjusted basis.

 

  1. Coronavirus cases stabilize in EU and decline in UK

The number of coronavirus cases in the European Union was stable in the week ended August 8, although the number of deaths rose, according to the European Centre for Disease Prevention and Control. The agency predicted that the number of cases would fall in the coming week and that the number of deaths would continue rising. The EU’s vaccination campaign has overtaken the U.S. in terms of administering first and second doses and should surpass the UK in the coming weeks. Many people protested against needing to have a health pass to enjoy bars and restaurants in France and Italy.

 

  1. Shares in Europe keep advancing

European shares advanced as investors remain focused on the economic recovery. The pan-European STOXX Europe 600 Index ended the week 1.25% higher. France’s CAC 40 Index gained 1.16%, Germany’s Xetra DAX Index advanced 1.37%, and Italy’s FTSE MIB Index climbed 2.51%. The UK’s FTSE 100 Index added 1.34%.

 

  1. Japan records modest gains

Japan’s stock market registered modest gains for the week, with the Nikkei 225 up 0.56% and the broader TOPIX Index finishing 1.40% higher. Coronavirus remains a growing threat for the country’s economic recovery and more restrictions are entirely possible.

 

  1. Chinese stocks posted gains despite crackdown

Chinese stocks were the best performing last week, despite worries that increased government oversight of the country’s technology and private education industries would spread to other sectors. For the week, the large-cap CSI 300 Index added 0.5% and the benchmark Shanghai Composite Index gained 1.7%, according to Reuters. In the bond market, the yield on the 10-year government bond rose 6 basis points to 2.90%. On Wednesday, China released a five-year blueprint calling for increased regulation affecting key parts of the economy. New regulations on online finance, AI and big data are to be expected.

 

  1. Taliban have taken Kabul as president flees

The Taliban claimed that the war in Afghanistan is over, as they have taken the capital following the flight of the country’s president, Ashraf Ghani. Victorious Taliban fighters patrolled the streets of Kabul on Monday as thousands of Afghans mobbed the city’s airport trying to flee the group’s feared hardline brand of rule. The US has moved all its embassy staff to the airport. The US military has secured the perimeter and is in the process of taking over air traffic control to evacuate American and allied personnel from the country, said the State Department.

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