Global Stock Market Weekly Analysis (28 Aug- 1 Sept 2023)

 

Global Stock Market Ended Higher this Week

 

The major global stock market indexes closed higher during the week. The global markets focused on the economic data from various countries this week. The key indexes in the US, Europe, and Asian markets ended higher as the economic data reported during the week were in line with or better than expected.

 

The US Stock Markets 

 

The US markets closed higher during the week, as investors focused mainly on the job and PCE data which is the Fed’s preferred gauge of inflation measure indicator. A decline in 10-year Treasury yields during the week also supported the tech and other growth stocks, whereas, the smallcap stocks outperformed.

The economic data released during the week appeared as bad news for the economy but was considered good news for the markets. On Tuesday, JOLT’s data showed job openings unexpectedly fell by 338,000 in July and hit their lowest level since March 2021. Markets gained, as this fueled the hope among investors that the Fed will likely skip the rate hike in the September meeting.

On Friday, the release of the nonfarm payrolls report showed that employers added 187,000 jobs in August was above expectation. But the average wage earnings were slightly below market expectations and the unemployment rate jumped to 3.8% from 3.5%, hitting its highest since February 2022.

As the labor market slowed, investors’ hopes appeared to grow on a slowdown in the economy. The second quarter GDP was revised downward to 2.1% annually from an earlier estimate of 2.4%. The personal Consumption Expenditures (PCE) price index and Core PCE released on Thursday was in line with the market expectation. However, the ISM manufacturing activity survey showed a slight improvement in August compared to July but still at a contraction level.

 

European Stock Market Indexes

 

The major indexes in Europe closed higher during the week on hopes that interest rate hike is going to end soon, and that a recession, if possible, likely to be little depth and short-lived. The European markets got a lift from China due to various stimulus measures and US markets on the hope of the Fed’s interest rate hike pause.

The eurozone inflation rate was steady at 5.3% in August, as the preliminary data showed by Eurostat, but the data was slightly higher than expected. The seasonally adjusted unemployment rate for July came at a record low of 6.4%, in line with the expectations.

The consumer price inflation in Germany moderated to 6.1% in August on a YoY basis, and hit a 14-month low, while retail sales fell in July much higher than expected. UK’s house price fell sharply in August, the largest decline since July 2009, according to Nationwide.

 

Asian Stock Markets Updates.

 

The Asian stock market indexes closed higher this week. Investors remained focused on the economic data from the US, China, and Europe. Indian stock market indexes ended higher and snapped a five-week losing streak You can read about the Indian stock market updates here.

 

Japan Stock Market

 

Japan’s stock market gained over the week, Nikkei closed higher for all five trading sessions. The sentiments remain upbeat due to the weaker-than-expected US economic data, which boosted the hope that the US Fed is likely to pause interest rate hikes in the next meeting. 

Traders also welcome China’s latest measures to boost its stock markets and economy. However, the upside remained capped due to the concern about Japan’s unemployment rate which rose to 2.7% in July, but the expectation was 2.5%.

 

Chinese Stock Market

 

China’s stock market index rose as the government issued various stimulus measures to revive its ailing economy. The government halved the stamp duty for stock trading boosting the market sentiments. The central bank also reduced the reserve ratio further to cheered the markets. The Manufacturing activity expanded in August as per the private report supported the markets.

However, there was negative news also, Evergrande Group, the major developer already in default, unveiled more losses and postponed credit meetings that were supposed to start this week. 

In Hong Kong, the Hang Seng Index rose during the week. Hang Seng was closed on Friday due to the approach of a typhoon.

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You may also like to read, US Markets LIVE: Dow and Nasdaq Composite Index 1 Sept 2023

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