Increasing tension between China and the US | Flow Traders Investment Competition | Week 30

Slight growth in the markets this week, with the S&P 500 Index increasing 1.44 percent, while the AEX ended up gaining 0.95%. The Dow Jones Industrial Average and the Eurostoxx 50 both both ended up gaining 1.59 and 0.47 percent respectively by week’s end. Nasdaq gained 1.4% throughout the week, while the VIX decreased by a mere -2.29 percent.

Due to the increased tension between China and the US, the pan European Stoxx 600 closed a touch above the flatline last Friday, with food and beverages falling 0.6%, the highest that week, while travel and leisure stocks jumped 0.8 percent. Due to the resistance of the Swedish government to not implement a Coronavirus lockdown, the banking system now seems vulnerable to credit losses, their central bank warns. The Riksbank said that if the coronavirus crisis becomes prolonged, the risks to financial stability will increase for the country. The central bank also stressed the necessity for further economic policy measures. The UK bond auction last Wednesday has sold its first three-year gilts at a yield of –0.003%, the first ever negative-yielding government bond sold in the UK. Due to the 500 billion Euro relief package proposal from France and Germany to the EU, the Euro has seen some significant increase past Wednesday.

The US Senate passed legislation Wednesday that could restrict Chinese companies from listing on American exchanges unless they abide by US regulatory and audit standards. As a reaction, the Chinese government said they shall not flinch in the face of any escalation of tensions between the two largest economies, yet stressing that cooperation should be the priority for recovery. Moreover, the Senate majority leader Mitch McConnel told the House Republicans the next coronavirus relief bill will not extend the enhanced unemployment insurance benefit, a reaction the bill past last week by the House Democrats, making the 600 dollars in federal backstop expire after January, instead of July. The unemployment insurance benefit still sparks a lot of debate within the House and Senate, with both parties arguing over the best plan to recover from the  economic damage the pandemic caused. Especially because of the severe unemployment statistics in May, further relief bill constraints look like a plausible option. 

This week we can expect the Initial Jobless Claims report in the US, as well as the harmonized CPI index of the EU. Both Amazon, Facebook, Chevron and ExxonMobil will hold their annual assembly this week, while in Japan and China several major earnings releases will be published, among them that of Suzuki and Air China.

On to the Flow Traders Investment Competition. Clear Water Group has held their first place this week with a whopping M2 of 48.65%, followed by Phoenix with an M2 of 17.20 percent. The group gaining the most spots is DHANDHO Investors, moving up 24 spots to the 16th place, with an M2 of –6.33%. The groups losing the most spots are Turbo Traders and Liquid Gold, both decreasing 8 spots to the 34th and 24th place respectively, with an M2 of –20.63% and 10.93%.

Sebastian Cornielje