Indicies
US stocks started the new month far better than they ended August after the S&P 500 and the Nasdaq posted their worst August performance since 2001, down 4.7% and 6.2% respectively. The Dow shed 4.3% for the month, its first down August in five years and the blue-chip measure's worst August since 2001. This past week, major bourses notched up a three-day rally to open September, the Dow ended up 2.93% at 10,447.93, the S&P 500 rose 3.75% to close at 1,104.51 and the Nasdaq climbed 3.72% to finish at 2,233.75.
European stocks followed their North American peers to start the September brightly, lifting the FTSE 100 4.48% for the week to 5,428.15, the French Cac climbed 4.7% to close at 3,672.20 and the German Dax climbed 4.13% to finish at 6,134.62.
In Asian markets, Japan's Nikkei Stock Average was the worst performer among major Asian market benchmarks in August, losing 7.5% during the month as the yen's strength against major currencies and global economic worries hit the nation's exporters. Hong Kong's Hang Seng Index gave up 2.5%, Australia's S&P/ASX 200 shed 2% and Taiwan's Taiex fell 1.9%, while China's Shanghai Composite and New Zealand's NZX 50 ended little changed. Some Southeast Asian markets fared better, with Thailand's SET Index rising 5.9% and Philippine shares adding 4.1%. This past week, the Nikkei climbed 1.37% while the Shanghai Composite Index rose 1.71%.
Dow Jones Industrial Average (August 30 – September 3)
Forex
The dollar index, a measure of the dollar against a basket of currencies, fell 1% last week as the dollar lost ground against its major trading partners. Soft data coming out of the US compared with the robust growth seen in Germany that is fueling the recovery in the EMU has shifted traders focus back to selling down the dollar based on its weak fundamentals compared to those in Europe. The Japanese yen, continued to trade by multi-year highs as the Bank of Japan has been deemed by traders as unwilling to intervene the market at present allowing the yen to continue pushing higher. The Swiss franc has seen very similar movements and posted fresh all-time lows against the euro this week as investors continue to hedge their plays by taking large safe-haven positions. In the commodity bloc, weakness in crude oil this week weighed heavily on the Loonie while the antipodeans were weighed down on several occasions by weak domestic data.
USD Index (August 30 – September 3)
Commodities
Gold marched higher again last week, notching up its fifth consecutive weekly gain. Rising 1% to $1,251.10 despite losing some ground on Friday as gold futures came off their two-month high after US jobs data came out better than expected. Gold tends to rise with bad economic news and decline with good economic news since it is seen as a safe-haven play.
Oil lost 0.8% last week after rising 2% the week prior. Analysts have expressed concern that oil was unable to rise amid a multi-day rally in equities and a weakening dollar, normally the signs that crude should be moving higher. Analysts are now suggesting the oil is entering a significant slump as players have little faith that consumers are back on their feet.
Gold (August 30 – September 3)
Equities
At the start of the week, Japan led gains across Asia as the Bank of Japan convened to tackle yen strength. The outcome however, was something of a disappointment which trimmed Tokyo's gains heavily in the final stretch of trade, shares of Canon rose 2.4% and Honda climbed 1.6%. European stocks ended the session flat despite some heavy M&A related talk which normally gives stocks a lift. Sanofi-Aventis confirmed it had rejected an offer from Genzyme for $18.5 billion, engine maker Safran was said to be preparing a bid for Zodiac Aerospace – a seat maker – and lastly Intel agreed to buy Germany's Infineon, a smartphone chip maker. In the North American session, stocks started with modest losses however, as risk aversion took hold of the market losses were accelerated and major bourses closed sharply lower.
On Tuesday, in Asia action was once again dominated by Japanese markets as the Nikkei crashed to a 16-month low, dragging down the rest of the region, Sharp, Canon and Toshiba all lost more than 4%. In London, better than expected US consumer confidence lifted shares, sparking a mini-rally in the mining sector, Anglo-America climbed 1.9%, Vendanta rose 2.1% and Rio Tinto jumped 2.4%. In the North American session, shares see-sawed between gains and losses and ended the session mixed after some firm data managed to offset FOMC jitters.
Midweek, Asian markets kicked off September on an upbeat note, with most regional indexes ending higher Wednesday as strong data from China helped investors overcome worries about a slowdown in global activity. European stocks rallied as U.S. data showed an unexpected rise in the ISM manufacturing index, rekindling hopes of a strong recovery in the global economy. In the North American session equities roared higher, Burger King was among the biggest gainers, rising 14.7% after a report in the WSJ said that the fast-food giant was looking in to selling itself to a PE firm.
On Thursday, Asian stock markets ended higher Thursday, though gains across the region were limited as caution set in ahead of Friday's non-farm payrolls data. Energy related stocks led broad gains in China as oil moved higher over-night. Financials were also well bid, led by Ping An Insurance. In Europe, markets closed mixed with some bourses eking out modest gains on the back of some US data. Major bourses were mostly consolidating Wednesday's bumper gains. In the North American session, shares flitted between gains and losses for a large portion of the session before finally turning higher in the final stretch. Burger King's stock rose another 25% after announcing that it was selling itself to 3G Capital a private-equity firm.
On Friday, Asian stocks advanced as an unexpected increase in U.S. pending-home sales helped ease economic worries and sent Japanese shares higher for a third straight session on the back of exporters such as Toyota Motor Corp (TM: 69.71 +1.49 +2.18%). Volumes were muted in many equity markets, however, and stocks and currencies were confined to narrow ranges as cautious investors awaited the U.S. nonfarm-payrolls report for August. In London stocks surged, as investors expressed relief over U.S. jobs data that was far less painful than expected. In the North American session shares rallied on the back of the aforementioned US jobs data led by financials, Goldman Sachs (GS: 147.29 +7.51 +5.37%) led the sector rising 5.3% after news that it would be closing down its prop trading unit.
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