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ICYMI: Weekly Market Recap: August 17th through August 21st

ICYMI: Week of August 17th through August 21st: Not as bad as we thought?

I reviewed the most recently released Global PMI heat map, and something that struck me was how much of a difference six months makes in the global economy. PMI stands for Purchasing Manager’s Index, and the Global PMI heat map provides insight into what purchasing managers’ thoughts about business activity and what they’re buying in the manufacturing and service sectors. You can use the heat map as a gauge of economic trends. At the beginning of the global lockdowns in April & May, the heat map was bright red (activity was deteriorating) across the globe. As of Friday, the map is a mix of green and neutral. A sign that things are slowly but surely improving whether it remains that way is yet to be seen given the possible resurgence of COVID across the globe. A commercial vaccine is still aways off, but every day we inch closer to some semblance of normalcy. Here’s a brief glimpse of what happened across the globe: U.S.: This week, the stock market in the U.S. had another successful run. The S&P 500 hit an intraday record on Tuesday. Technology stocks lead the way with Facebook, Apple, Microsoft all rising 2% on Thursday. Economic reports for new home sales and existing home sales gave an optimistic outlook about the recovery. New home sales were up 22.6% in July due to an increase in single and multifamily construction. It seems people are easing back into the housing market, so if you were considering buying a home, whether as a primary residence or as an investment property, you may want to make a move sooner rather than later. Existing home sales set a record in July, up 24.7%, the highest increase ever. The number of existing-home sales in the market declined. This means increased competition for homebuyers, so you may have a harder time making an offer. Minutes of the Federal Open Market Committee meeting held on July 28 & 29th was released this week. The minutes noted a decrease in market volatility. The reduction over the past couple of months was despite concerns about a resurgence of COVID. The minutes also indicated that the Fed continues to be surprised at the level of consumer spending amid economic uncertainty. On the unemployment front, new jobless claims increased to 1.1 million, which means while spending and home sales are growing, there are still a significant number of people without work. The economic recovery may hit a few speed bumps.
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The European markets ended the week with mixed results due to continued concern about a Covid-19 resurgence and the PMI news in the Eurozone. 

The flash Composite Purchasing Managers’ Index shows how well the economy is performing decreased from 54.9 to 51.6. 

Construction output declined for the fifth straight month in July. 

In the United Kingdom, reports came out that the public sector net debt (a.k.a. the national debt) hit GBP 2.0 trillion for the first time in July. The debt is the amount of debt owed by the public sector to private organizations. 

While factory orders rose in August in the U.K. to -44, orders were still way below their normal levels. 

The services sector PMI increased to 60.1 in August from 56.5, indicating that the services sector is expanding. 

Overall, Europe’s economic outlook remains uneven, and the next couple of months will be telling. 

Latin America: 

In Latin America, the Brazilian economy added 131,000 more jobs in July. Most jobs added in July since 2012. The most significant gains were in construction and industry jobs as the country continues with its reopening plans. 

Chile Producer Inflation rate increased by 8.5% in July. The producer price measures the price change of products sold as they leave the producer. The gain was mostly due to the cost of mining copper. 

Peru’s economy entered a recession as the economy declined by 30% in the second quarter. The most significant sectors to take a hit were mining and processing. 

In Mexico, auto exports fell 5.5% in July due to shipment declines from General Motors, Volkswagen, Ford Motor and Nissan. 


The services sector PMI in Japan decreased to 45.0 in August from 45.4 in July. Employment in this sector fell for the sixth straight month. Manufacturing, on the other hand, increased to 46.6 in August. Overall, manufacturing continues to decline in the country, down for the 16th straight month. 

Bank Indonesia left its monetary policy unchanged, leaving a key policy rate at 4.0%. 

In the Philippines, stocks ended on a 2-week low down 62 points. The central bank left the overnight borrowing rate unchanged at 2.25% as they keep an eye on signs of a recovery. 


In Africa, industrial production in Senegal rose by 1.4% in June. Many sectors of the economy, including construction, mining, and mechanical industries, all rebounded. 

In Ghana, the inflation rate rose to 11.4% in July, an increase of .2% from the previous month. The most significant factor contributing to the rise in inflation is food and non-alcoholic beverages, which account for over 43% of the Consumer Price Index. 

In South Africa, the pace of building permits declines slowed. More and more institutions are completing their building plans. 

Some numbers for people who like numbers: 

The Dow Jones Industrial Average closed at 27,930 with no change for the week

S&P 500 closed the week up 0.71% ending at 3,397

Nasdaq was up 2.7% from the previous week ending at 11,312

MSCI EAFE closed at 1,886 down 0.7%.


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