Asian markets were under heavy pressure nearly all week long as investors worried about the Turkish financial crisis, as well as the trade issues between the U.S. and China. There was finally some relief towards the end of the week for most markets, however, as the Turkish Lira stabilized, and China announced a trade meeting with the U.S. to occur before the end of August. That helped markets gain on Friday, but it was too late to save the week for most indices. Once again, mainland China led losses, with the Shanghai Composite 4.6% lower on the week and the Hang Seng following the mainland’s lead and dropping 4.1%. Japan’s Nikkei pared losses and finished the week with a loss of less than 0.1%. In South Korea weakness from heavy weights Samsung and HK Hynix weighed and led to a 1.6% weekly loss. The best performance came from Australia, where the S&P/ASX 200 gained 1% for the week and closed at a ten-year high.
That strength in Australian equities was mostly due to weakness from the Australian dollar, and that weakness looked to be ending by Friday; so, the coming week could see Australian equities taking a lower path. Chinese markets weren’t even encouraged by the news of a trade meeting with the U.S., so the coming week could remain difficult for Chinese equities. The Shanghai Composite is now lower for five sessions in a row, and Hong Kong’s Hang Seng has fallen for five of the past six sessions. Japan will be completely about the Yen; and with the U.S. dollar strengthening broadly and risk aversion receding, we should see a weaker Yen and stronger equities.
European markets suffered a difficult week, with fears of the Turkish financial crisis spilling over into European Union countries, weighing on sentiment and stock prices all week long. Markets received a brief reprieve on Thursday, but it wasn’t nearly enough to keep them from broad based weekly losses. The pan-European Stoxx Europe 600 was 1.2% lower for the week, but the worst loss came from Italy, where the FTSE MiB fell 3.3% on a weekly basis. Germany’s DAX was 1.7% lower for the week, despite positive news on the trade front, while the CAC 40 in France lost 1.3% for the week. In the U.K., the FTSE suffered its worst weekly loss since March as it fell 1.4% on a weekly basis.
The coming week could be better as the Turkish Lira and economy continue to stabilize; but there do remain concerns about banks exposure to Turkish assets, which will be a headwind for markets. It also looks as if the Euro is firming against the U.S. dollar in response to stability in Turkish assets, and this will be another headwind for markets. One positive is the news of a trade meeting between the U.S. and China before the end of the month, and this should be especially helpful for German equities. In the U.K. more downside is possible, as investors have had little cheer on the political front. The ongoing Brexit concerns appear to have investors nearing exhaustion, and this is causing the market to sag steadily lower.
U.S. markets gained in the final two sessions of the week and were mostly higher on a weekly basis, a definite contrast from their global peers. The Dow Industrials led, gaining 1.4% on a weekly basis and closing at its highest level since February. The S&P 500 did well and gained 0.6% for the week, but the Nasdaq saw a weekly loss of 0.3% as technology remained under pressure for much of the week. Still, the results in the U.S. were better than for nearly every major global market.
Earnings season is coming to a close, so investors will have to focus more on the geopolitical events that have sent most global markets lower of late. This could mean a pullback in the high-flying U.S. markets, although the strength of the economy in the U.S. could be enough to keep them afloat. The upcoming trade meeting between the U.S. and China is a positive for markets as well, although there isn’t much widespread hope for a positive outcome from the meeting.
Gold suffered its worst weekly loss since May 2017, falling almost 2.9% for the week, as the increasing strength of the U.S. dollar provided a headwind that sent the yellow metal crashing down through the $1,200 level early in the week. Analysts are looking for the precious metal to soon test the $1,150 level, as expectations for a stronger U.S. dollar and rising interest rates weigh on gold prices.
Crude got off to a weak start this past week, and even though it ended the week with two consecutive winning sessions, it was still 2.5% lower on a weekly basis. A stronger U.S. dollar pressured crude; but the real damage was done when the U.S. reported a large surprise increase in its inventory levels. The coming week could see a rebound for crude, as it ended the week on a high note, and the U.S. dollar has also been pulling back. Trade talks between the U.S. and China will have an impact, as will the Jackson Hole summit late in the week.
|07:00||EUR||German PPI m/m|
|11:00||EUR||German Buba Monthly Report|
|13:15||CAD||Gov Council Member Wilkins Speaks|
|23:00||AUD||RBA Gov Lowe Speaks|
|02:30||AUD||Monetary Policy Meeting Minutes|
|09:30||GBP||Public Sector Net Borrowing|
|11:00||GBP||CBI Industrial Order Expectations|
|23:45||NZD||Retail Sales q/q|
|02:30||AUD||Construction Work Done q/q|
|04:10||AUD||RBA Assist Gov Debelle Speaks|
|05:30||JPY||All Industries Activity m/m|
|13:30||CAD||Core Retail Sales m/m|
|13:30||CAD||Retail Sales m/m|
|15:00||USD||Existing Home Sales|
|15:30||USD||Crude Oil Inventories|
|19:00||USD||FOMC Meeting Minutes|
|01:30||JPY||Flash Manufacturing PMI|
|08:00||EUR||French Flash Manufacturing PMI|
|08:00||EUR||French Flash Services PMI|
|08:30||EUR||German Flash Manufacturing PMI|
|08:30||EUR||German Flash Services PMI|
|09:00||EUR||Flash Manufacturing PMI|
|09:00||EUR||Flash Services PMI|
|12:30||EUR||ECB Monetary Policy Meeting Accounts|
|14:45||USD||Flash Manufacturing PMI|
|14:45||USD||Flash Services PMI|
|15:00||USD||New Home Sales|
|Day 1||ALL||Jackson Hole Symposium|
|00:30||JPY||National Core CPI y/y|
|07:00||EUR||German Final GDP q/q|
|13:30||USD||Core Durable Goods Orders m/m|
|13:30||USD||Durable Goods Orders m/m|
|Day 2||ALL||Jackson Hole Symposium|