Global Stock Market-Weekly Updates (14-18 Aug 2023)
The major global stock market indexes made a sharp fall during the week. The strong economic data from the US raised fear of higher interest rates for a longer period, while the weak economic data from China disappoints traders during the week. The key global stock market indexes in the US, Europe, and Asian markets ended in the deep red during the week.
The US Stock Market
It was the worst week for the US markets in the current year. All three key equity market indexes in the US fell sharply, as the focus shifted to the minutes of the Federal Reserve’s last meeting held in July. The sharp rally in longer-term Treasury yields and fears of a sharp slowdown in China after disappointing economic data hit the market sentiments. Growth shares and small-cap stocks suffered the most during the week.
The data released by the Commerce Department showed that retail sales jumped 0.7% in July much higher than expected. Some of the other economic data released during the week, such as Industrial Production, Housing Starts, and Manufacturing Activity were much better than expected. The weekly jobless claims also declined, indicating a sign of strong labor markets.
The markets reacted negatively after the release of the minutes from the Federal Reserve’s last policy meeting which raised worries about how policymakers would respond to continued growth signals. Investors fear that higher interest rates will remain for a longer period.
Meanwhile, the rate hike expectations measured by the FedWatch tool remained steady during the week, it is showing a 91% chance that the Fed to pause interest rates at current levels in its September meeting.
European Stock Market Indexes
The European stock markets also fell sharply during the week due to a concern about the high-interest rate in Europe for a long period and China’s economic outlook. All major indexes in the region fell sharply this week.
The economic data released during the week showed that UK wage growth accelerated in the second quarter, increasing pressure on the central bank to continue raising interest rates. Meanwhile, the data showed UK’s unemployment rose more than expected compared to the previous quarter.
However, the market downside was capped as the annual UK inflation slowed in July to 6.8% from 7.9% in the previous month, due to a fall in energy and food prices.
Asian Stock Markets Updates
The Asian stock market indexes also ended sharply lower during the week, due to the negative cues from Wall Street and concerns about the economic outlook in China. Indian stock market indexes ended the week marginally lower and extended losses for the fourth consecutive week. You can read about the Indian stock market weekly updates here.
Japan Stock Market
Japan’s stock market index Nikkei fell sharply lower this week due to concern about the economic outlook of the world’s second-largest economy. Investors are concerned about China’s macroeconomic weakness and its troubled property sector and its impact on the global economy.
The downside in the market was limited as Japan’s Q2 GDP grew much higher than economists forecast. Japan’s headline consumer price inflation remained unchanged in July but core inflation slowed as compared to the previous month.
Meanwhile, customs exports declined 0.3% on a YoY basis in July, the first decline in more than two years, mainly due to weak demand from Asia.
Chinese Stock Market
China’s Shanghai index ended lower for the week, as the economic data released during the week disappointed investors. The official data released during the week showed that China’s economic activity continues to weaken. Industrial output and retail sales missed the expectation in July. Fixed asset investment growth in the first seven months of the current year missed forecast.
More bad news from the Chinese property markets last week. New home prices fell in July compared to the previous month. Country Garden, the largest poverty developer, suspended trading as the company missed interest payments. Real Estate giant Evergrande filed for bankruptcy protection in New York to protect the company from U.S. creditors as it works on debt restructuring
Hong Kong benchmark, the Hang Seng index also closed sharply lower during the week.
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