Gerald Fitzgerald’s Market Review July 13th

LAST WEEK IN 30 SECONDS...

Global markets eeked out marginal gains last week as an acceleration in the number of COVID-19 cases in the US saw ongoing market momentum tempered with caution. China’s Shanghai composite returned 7.3% following supportive state media on the economic recovery buoying investor sentiment, whilst the tech heavy US NASDAQ shows no sign of slowing and is now up 18.9% for the year-to-date.

With the acceleration in COVID-19 cases, traditional “safe haven” assets including gold and high quality government bonds saw increased investor appetite last week, with gold finishing the week over $1,800. Global equities in euro terms finished the week 0.8% higher.

THIS WEEK IN 30 SECONDS...

The week sees Q2 earnings results kick off with over 160 companies providing updates on revenue and importantly earnings forecast for the remainder of 2020. Notable disclosures include Johnson & Johnson, Netflix and BlackRock.

From an economic point of view, Eurozone industrial production updates are due for release on Tuesday along with US industrial production on Wednesday. Chinese GDP numbers are due for release on Wednesday and are anticipated to show a sharp reversal from the previous quarter. The European Central Bank (ECB) meet on Thursday and whilst no change to interest rates are expected, investors will subsequently scrutinise the carefully choreographed press conference and policy statement.

“SAVE HAVEN” VIEW ON GOLD OBLIVIOUS TO THE PAST

Gold broke through $1,800 in recent weeks with many predicting the ongoing uncertainty will push the commodity higher. We note that this has not been the first time gold has been over $1,800, hitting similar levels back in 2011. For those investors who invested at that time in gold, it has taken a significant number of years to get back to par. This “safe haven” is not exactly risk free.