Global Stock Market-Weekly Updates (31 July- 4 Aug 2023)
The global stock market indexes mostly closed lower during the week. The world markets fell sharply in the middle of the week after unexpected downgrades to the US government’s credit rating by Fitch. The US, Europe, and major indices in Asian markets except China fell during the week.
US Stock Markets – Weekly Updates
The US stock market indexes started August month on a weak note after a strong closing in July. The equity benchmarks fell sharply, as Treasury yields spike due to the US credit rating downgrade by the Fitch rating agency. Among the three key indices, the tech-heavy Nasdaq Composite index fell the most during the week.
The Nasdaq composite fell heavily during the week due to a spike in the benchmark 10-year US Treasury note. It increased from 3.95% at the closing of the previous week to almost 4.20% by early Friday, later it closed at 4.05 due to the monthly job report.
On the earning front, big techs like Amazon and Apple announced their quarterly earnings in the post-market hours on Thursday. Amazon beat expectations and gained as much as 10% on Friday while Apple closed around 3% lower after it reported mixed earnings.
The ISM reports showed that US manufacturing PMI contracted for nine months in a row in July, while Services PMI came slightly lower in July but in the expansion zone. On Friday, the closely watched monthly job data showed, the employer added 187000 jobs in July as compared to June’s revised data of 185000.
The unemployment rate came slightly lower to 3.5% from 3.6% the previous month. Meanwhile, the average hourly earnings rose 0.4% in July, unchanged from the previous month, and wages grew 4.4% on a year-on-year basis.
European Stock Market Indexes- Weekly Updates
European stock markets ended lower following negative cues from US markets and as earning reports disappointed investors’ enthusiasm during the week. The pan-European Stoxx 600 index and other major indexes fell around 2-3% this week.
The Bank of England raised the interest rate by 25 bps to a 15-year high of 5.25%. Further, the Central Bank indicated that interest rates are likely to remain high for a longer period unless inflation return to the 2% target. The weakness in the housing market continued in the UK amid the highest mortgage rates since 2008. Meanwhile, the latest data showed House prices fell sharply to 3.8% YoY in July.
The eurozone inflation rate slowed further to 5.3% in July from 5.5% reported in the previous month. A separate report showed that the composite index of business activity in services and manufacturing was revised slightly lower to 48.6 in July.
Asian Stock Markets Updates.
The Asian stock market indexes mostly ended lower during the week, due to a surprising US credit rating downgrade. However, China ended higher this week in the hope of more stimulus. Indian stock market indexes extended losses for the second consecutive week. You can read about the Indian stock market weekly updates here
Japan Stock Market
Japan’s stock market index ended lower this week, as the market sentiments were downbeat by a US sovereign credit rating downgrade. The markets fell sharply despite the strong local corporate earnings reported during the week.
On the economic front, Japan’s manufacturing PMI numbers slipped further into the contraction zone in July. The new orders and output declined due to weak demand both in domestic and international markets. The expansion in the Services sector also slowed slightly in July as per the Jibun Bank Services PMI data.
Chinese Stock Market
Chinese stock markets ended higher this week due to stimulus support from Beijing which offset the concern about the latest batch of weak economic data. China’s politburo pledge to revive consumption is finally taking shape. A wide range of policies were announced on removing restrictions on consumption in sectors including autos, real estate, and services.
China’s official manufacturing Purchasing Managers’ Index (PMI) rose to 49.3 in July in line with expectation, from June’s 49, in contraction for the fourth consecutive month. The non-manufacturing PMI declined to a weaker-than-expected 51.5 from 53.2 in June. The new home sales in China declined 33.1% in July as compared to the same period last year, extending declines for a second month.
Hong Kong benchmark, the Hang Seng index closed lower during the week.
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