Skip to main content

Weekly World Markets Review (15-19 June 2020)

Back on track but for how long?
posted onJune 20, 2020

Following a bruising decline the previous week, world markets rebounded sharply. The biggest catalysts were the Fed’s decision to increase its support and the news that the White House is working on a massive stimulus plan focused on infrastructure investment. Sentiment also got a lift from upbeat economic data.


Stocks erased part of the previous week’s steep declines, following reports of  a $1tn infrastructure-heavy stimulus plan and Fed's move to begin buying a broad portfolio of US corporate bonds directly. Adding to the upbeat mood, U.S. retail sales posted a record gain in May, surging 17.7%, the biggest gain in history, as more businesses were allowed to reopen amid the relaxing of lockdowns.

The figure was significantly above projections. Consumers are consuming but last month’s sales were still down 8% from February. Coronavirus wounds are still visible with weekly jobless claims staying above 1 million for the 13th consecutive week.

Investors grew more confident in the economic rebound. Fed Chair Jerome Powell said the US economy is beginning to bounce back while Federal Reserve Bank of Dallas President Robert Kaplan said  that the economy will rebound in the second half of 2020.

Another catalyst was Morgan Stanley saying it has greater confidence in a “V-shaped” recovery from the coronavirus pandemic. The investment firm also raised its stock market forecast. NYSE president Stacey Cunningham speaking to CNBC on Wednesday predicted a “very strong second half of the year."

world markets nasdaq


Japanese equities posted small gains for the week as the country reported its biggest monthly decline in exports since 2009. Exports plunged 28.3 percent from a year earlier to ¥4.18 trillion ($39 billion). Ministry of Finance (MOF) data showed.

The trade data came a day after the Bank of Japan (BoJ), kept its monetary policy largely unchangedand decided to boost financing support for hard-hit companies beyond $1 trillion.

BoJ Governor Haruhiko Kuroda warned  the country's economy is in an "extremely severe situation." Although Kuroda said uncertainties continue to be "very high" he was also optimistic saying he believes the economy will recover over time.

Chinese markets were also higher this week with the domestic large-cap CSI 300 index outpacing the benchmark Shanghai Composite. China's Finance Ministry revealed on Tuesday the government will hep businesses with additional $9,89 billion (70 billion yuan).

China’s economy- which plummeted 6.8% in the first quarter, the first contraction on record- may grow 3% this year as the government ramps up policy support, Zhang Ming, a researcher at the Chinese Academy of Social Sciences, said in a forum held online.

In another stimulus step,  China’s State Council called on banks to give up RMB 1.5 trillion ($212bn) in profits this year to finance cheap business lending. Shares of Chinese banks fell broadly in Hong Kong and mainland markets on Thursday.

SSE Composite Index

The Australian benchmark index managed to  add 1.62 per cent for the week, as tech stocks soared and financials and miners kept the local market flat on Friday. On the data front, retail sales jumped by a record 16.3 per cent in May as shoppers embraced the lifting of lockdowns, Australian Bureau of Statistics data showed. Meanwhile, Chinese buyer enquiries for Australian homes fell to their lowest in almost three years in May.


European equities ended the week higher with the markets finding support from recent relatively upbeat economic data. The ZEW Indicator of Economic Sentiment for Germany showed that expectations among investors rose to a higher-than-expected 63.4 in June, which corresponds to a rise of 12.4 points compared with the May result. U.K. retail sales also came in much better than expected for May. The amount of goods sold last month increased by 12% month-on-month,
according to the Office for National Statistics.

Despite the rebound, retail sales still remain well below pre-lockdown levels. The country's unemployment rate remained unchanged from the previous 3.9% in April. The Bank of England (BoE) enlarged its bond-buying program by GBP 100 billion, taking the recent round of quantitative easing (QE) to £300bn. The Bank also decided to keep its key interest rate at 0.1%. Equities were also supported by positive talk around the Brexit negotiations-  which have yielded little so far- and the reopening of key economies.



Speaking of negotiations, EU leaders met on Friday to hash out the details of a 750 billion euro recovery fund at a video summit.  After over four hours of bitter wrangling, the meeting ended without an agreement, despite geopolitical challenges which have added urgency to the talks. Leaders are expected to meet again next month.

European Central Bank  (ECB) Vice President Luis De Guindos said earlier this week that it would be optimal for indebted eurozone countries Italy, Spain or Greece if the EU aid would be distributed via grants rather than loans.

In Italy, Economy Minister Roberto Gualtieri told reporters on Monday the government is following with attention the merger between the London Stock Exchange (LSE) and Refinitiv, and its implications for Borsa Italiana owned by LSE.

The ECB published on Thursday its Economic Bulletin monthly report warning significant contraction is expected in the second quarter in the eurozone. Meanwhile, eurozone banks borrowed a record 1.31 trillion euros from the Frankfurt-based institution on Thursday, taking advantage of negative interest rates. Of note, ECB is struggling with weak public trust, according to a new paper.

Markets got a lift, investors felt confident about US economy’s capacity for resilience but there are still concerns the recent rally has gone too far. More uncertainties are likely to enter the spotlight including an uneven recovery, the continuation of geopolitical tensions and the debt burden caused by the flood of stimulus measures worldwide.

Read our full world markets weekly report for free here. 10 pages covering geopolitics, finance, business, investing, trading, and more.

What's ahead next week:

European Council Meeting 

Public Sector Net Borrowing and Retail Sales 

Producer Price Index

Retail Sales 

New home sales 
Existing home sales 
Markit Purchasing Managers’ Indices 
Durable goods orders 
Gross Domestic Product 
Personal income and spending 
Univ. of Michigan Consumer Sentiment Index 

The content of this review is for informational purposes only and should not be interpreted as specific investment advice.