Market Updates

This week is poised to be a dramatic one for the EU and the United Kingdom, with a five-day stretch of face-to-face discussions in London, referred to as a ‘moment of reckoning’.

Last week saw equity markets continue their grind higher, with the familiar theme of US technology stocks leading the way higher. Volumes and news flow were once again fairly light due to the summer holiday season.

The pandemic has sped up key structural trends and triggered substantial market swings, precipitating an urgent need to rethink strategic asset allocations. BlackRock favour reduced exposure to nominal developed market (DM) government bonds and greater allocations to inflation-linked bonds.

Last week was quiet for equity markets with the second-quarter 2020 earnings season now behind us and many market participants on holiday. The fate of technology stocks will likely be a key driver for equity markets globally into year-end.

As summer started and lockdowns eased across Europe, a ‘feel-good’ factor helped consumer activity start to rebound nicely in a number of countries. However, concerns seem to now be rising again over an increase in the new COVID-19 cases across the continent.

A prolonged period of U.S. dollar gains has reversed abruptly. The policy revolution to cushion the pandemic’s blow is a key driver, as it has eroded the dollar’s interest rate advantage and helped lift risk appetite off its March trough, in BlackRock’s view.

Key themes Franklin’s Trading Desk team has an eye on include the shrugging off COVID-19 concerns, Gold prices surge and the confusing Bank of England messaging.

Key themes Franklin’s Trading Desk team has an eye on include the ongoing COVID-19 pandemic and it’s impact, earnings season in the United States and Europe, monetary policy meetings and ugly gross domestic product (GDP) data.

Corporate earnings estimates look to be troughing as economies reopen with fits and starts. We have increased our overweight in the quality factor because we see it as most resilient to the dynamics of a choppy activity restart, given its focus on companies with strong balance sheets and profitability

We have pointed to a tectonic shift toward sustainability, and how the global pandemic has accelerated this process. This highlights the need for real resilience in portfolios to guard against risks ranging from vulnerable global supply chains to the intensifying effects of climate change.