ICYMI: Weekly Market Recap: August 3rd through August 7th

ICYMI: Week of August 3rd through August 7th: This week was good?

In the U.S., the markets this week were up. The major indices were each up over 2% making for some much needed good news. 

The Bank of England revised it’s economic forecast while Mexico shared some excellent jobs news. 

Here’s a look across the globe. 

U.S.:

The Manufacturing sector in the U.S. expanded in July. ISM’s Manufacturing Purchasing Manager’s Index (PMI) rose from 52.6 in June to 54.2 in July, which was better than expected. Remember that a rising index could mean we should expect higher corporate profits. 

Other data that came out this week was the nonresidential construction spending analyzed by the Associated Builders and Contractors. The data revealed a continued decline in construction spending by 0.7% in June.

Mixed data came out this week in the form of the factory new orders and ADP private employment report. 

There was a 6.2% increase in new orders for U.S.-made goods in June due to durable goods such as Motor vehicle bodies, parts, and trailers.

ADP released private payroll data, which showed that there was an increase of only 167,000, which was far short of the 1 million economists were predicting. 

Other big news in the U.S. is the collapse of negation talks in Congress to extend unemployment benefits. The additional $600 weekly benefit expired at the end of July without a replacement. As Congress continues to hammer out a new plan, some states such as California are working on their plan to replace the weekly benefit while Congress continues negotiations. 

In the markets, the S&P 500 was up and within 1.2% of its February all-time highs buoyed by strong earnings from Wayfair, Fiverr, and LivePerson. 

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Europe: 

In Europe, the Bank of England released its monetary policy report with an updated forecast. While the Bank predicts a quick bounce back from the COVID crisis, the overall decline in the economy won’t be as bad as initially anticipated. They believe the turnaround of the economy to pre-pandemic levels will be quite slow. The Bank will continue to keep interest rates at zero.

Manufacturing activity is a good indicator of how you can expect a given economy to perform. The Eurozone’s manufacturing activity increased in July for the first time in over a year and a half. Specifically, Germany’s manufacturing activity was the highest; it’s been since 2018. While manufacturing business was picking up, the rate of job loss continued to accelerate. 

The EuroStoxx600 was up a little over 2% for the week. 

Latin America: 

The Brazilian economy, like many others, continues to be hammered by the pandemic. Inflation was the highest it’s been in four years, hovering at 2.3%. The Brazilian Central Bank cut a key interest rate to 2%.

The Chilean economy declined by 12.4% in June due to decreased activity in manufacturing and construction. There was good news out of the copper miners. The largest copper miners boosted output in June. You’ll recall that If demand is strong for copper exports, then the world economy is likely headed in the right direction.

Mexico has stopped hemorrhaging jobs. The country has already added 15,000 jobs in August, which could be a sign of an improving economy. 

Asia:

In China, a good indicator to use an investor to gauge the overall health of the economy is the Caixin Manufacturing PMI, which increased from 51.2 in June to 52.8 in July beating estimates. 

Despite ongoing tensions between the U.S. government and the Chinese company, ByteDance over their social media platform TikTok, the Shanghai Composite Index was up on Thursday and slightly dipped on Friday. 

In Japan, the Bank of Japan’s Governor cautioned against stricter lockdown measures due to its impact on the economy. 

Africa:

The CEO of Ecobank, a large regional bank in many African countries, shared that profits were down 18% due to the pandemic. 

South Africa’s central bank scaled back its bond purchase program by half to decrease the money supply. 

Some numbers for people who like numbers: 

The Dow Jones Industrial Average closed at 27,433 up 3.8% for the week

S&P 500 closed the week up 2.5% ending at 3,351

Nasdaq was up 2.5% from the previous week ending at 11,011

MSCI EAFE closed at 1,862 up 2.3%.

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