Read the 10 stories to remember from the week which ended October 30.
Story #1: U.S stocks suffer biggest drop since March
Equities suffered their worst weekly declines since March dropped for the second consecutive week. The S&P 500, the Dow, and the NASDAQ posted declines of around 6% as investors weighed rising coronavirus cases, election uncertainty, and stalled congressional efforts for an economic relief package. With the exception of the S&P 500 Index, the major benchmarks fell into correction territory on Friday morning, or down over 10% from recent highs. The declines were broad-based, but information technology and consumer discretionary shares fell the most within the S&P 500. On Thursday, a measure of stock market volatility rose to its highest level since June.
Story #2: October setback
The major U.S. stock indexes fell for the second month in a row, a reversal from the five consecutive monthly gains in the April to August period. For October, the S&P 500 fell nearly 3%, he Dow dropped nearly 5%, and the NASDAQ lost around 2%.
Story #3: Q3 earnings beat
The week marked the peak of third-quarter earnings reporting season—180 of the S&P 500 companies were expected to report earnings during the week, according to Refinitiv. With nearly two-thirds of the companies in the S&P 500, the number of firms that had beaten expectations was at or near a record level as of Friday. According to FactSet, 86% of the companies that had reported third-quarter results exceeded analysts’ earnings-per-share forecasts, compared with an average of 73% over the previous five-year period. Thursday evening brought the release of reports from tech and internet giants Apple, Amazon, Alphabet (parent of Google), and Facebook. Each beat consensus earnings and revenue estimates, but all except Alphabet fell in trading Friday. Apple, in particular, weighed on the benchmarks as investors appeared disappointed by iPhone sales.
Story #4: Stalled negotiations on U.S Fiscal deal
Talks between congressional leaders and the White House toward further coronavirus-related economic relief collapsed, although the effort could be renewed after Tuesday’s U.S. election. Discussions between House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin hit an impasse, and members of Congress left Washington in advance of the election.
Story #5 Upbeat U.S data
The U.S. gross domestic product (GDP) had increased at an annualized rate of 33.1% in the third quarter, above consensus expectations of around 31%. Investors also seemed encouraged by weekly jobless claims, which came in lower than forecast and reached a new pandemic low. Earlier in the week, the Commerce Department reported that durable goods orders had risen more than expected (1.9%) in September, with core capital goods (excluding defense and aircraft) orders reaching a six-year high.
Story #6: U.S Treasury yields rise on falling jobless claims while Equity losses weigh on high yield bonds
U.S longer-term Treasury yields declined early in the week as surging coronavirus cases in Europe and the U.S. magnified uncertainty about the economic recovery. On Thursday, however, yields largely retraced earlier moves on better-than-expected economic data. Falling stock prices and uncertainty about the timing of U.S. fiscal stimulus weighed on the performance of high yield bonds. Credit spreads widened and below investment-grade funds reported outflows.
Story #7: Oil setback
Crude oil prices tumbled more than 10% for the week, falling to their lowest level in five months. U.S. crude dropped below $36 per barrel as the economic impact from rising coronavirus cases in the United States and Europe weighed on prices.
Story #8: European stocks tumbled as France and Germany impose lockdowns
Shares in Europe tumbled the most since March, as investors fear that lockdowns aiming to control the coronavirus’ spread could push the eurozone economy into a double-dip recession. In local currency terms, the pan-European STOXX Europe 600 Index ended the week 5.56% lower, while Germany’s DAX Index dropped 8.61%. The UK’s FTSE 100 Index declined 4.83%. The major European countries implemented stricter measures to contain the coronavirus epidemic, although many businesses and schools will remain open, which could soften the hit to economies. French President Emmanuel Macron ordered a nationwide lockdown until December, with limitations on outdoor movement and mandatory working from home. Germany also announced sweeping restrictions, shutting bars, restaurants, and theaters for a month. Spain extended a state of emergency for six months. In the UK, the strictest, tier-3 containment regime was extended to Nottinghamshire and West Yorkshire.
Story #9: ECB keeps policy unchanged, says “risks clearly tilted to the downside”
The ECB left its monetary policy unchanged, keeping its deposit rate at -0.5% and its emergency bond-buying program at EUR 1.35 trillion. The ECB said risks were “clearly tilted to the downside”. The eurozone economy rebounded more strongly than expected in the third quarter, although growth was still below the levels seen last year, preliminary official data showed. Eurostat estimated that GDP grew 12.7% after contracting 11.8% in the second quarter. Consumer prices fell 0.3% year-on-year for a second consecutive month, in line with consensus expectations.
Story #10: Chinese fintech company Ant Group geared up for its mega initial public offering (IPO)
Ant Group aims to raise around USD 35 billion through selling an 11% stake in a dual Hong Kong-Shanghai listing in what promises to be the world’s largest IPO, exceeding Saudi Aramco’s USD 29 billion sale last year. The deal is a sign of China’s status as a leader in “new economy” areas, as well as the attractiveness of Chinese companies to global investors even at a time of rising anti-China sentiment in the West.
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