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SATURDAY NIGHT MARKETS: Aug. 23-28

What happened this week in the financial markets?

The week began with a good uptick in the markets. On Monday, almost all major indexes gave a strong signal of vitality, including the Italian index (MIB), which, however, went down gradually in the following days.

The announced détente between the U.S. and CHINA on the Phase One trade agreement (read here) has brought positivity to markets. A détente, however, that seems to have lasted only a few days.

Meanwhile, on Thursday, Powell, chairman of the Federal Reserve, announced a significant revision of monetary policy strategy by the U.S. central bank. In practice, he promised protracted support for the economy indefinitely, particularly the labor market, while also giving U.S. inflation a chance to exceed 2 percent. Here, too, the markets reacted quite positively. We will have to see what this continued liquidity from the FED injected into the markets and the probable devaluation of the dollar given a possible, but not certain, increase in inflation may entail for the future. Read more here.

Finally, of note is the successful IPO (stock market placement) of Xpeng on the U.S. market (NYSE), a Chinese electric car company competing with Tesla. We discussed it in this article. On Friday it closed up 7 percent to $22.79.

What happened this week in the financial markets? Here are the performances of the most important indexes.

What happened this week. Here are the performances of the indexes
source: Webank’s T3

As we can see, the NASDAQ remains the best performing index in the international financial market. Also in the positive this week with +3.81 percent. This is followed by the other two U.S. indices (S&P500 and DOW JONES) and the DAX (German index). Europe’s EUROSTOXX50 index touched 2 percent (1.71 percent). China’s CHINA 50 index also did well with more than 2 percent.
The Italian MIB index failed to reach 1 percent even though positive due to a drop in the week’s end. Japanese NIKKEI slightly negative.

Of note is the increase in the VIX on the S&P500, which is indicating to us an increase in volatility. The markets are not quiet. We will see what happens next week.

What happened this week. Financial index performance chart
performance week of August 21 to 29, 2020 of major financial indexes

What happened this week at MIB?

Let’s take a look at our index. As we said, the MIB was slightly up thanks to Monday’s good result and then gradually lost with the days to follow. The MIB index seems almost at a standstill, perhaps waiting for confirmation with respect to promises of contributions from the ECB and Europe and especially waiting for how the government will use this money. Confidence about a full recovery is still a long way off.

Here are this week’s top 10 performance rankings (MIB):

NamePrice closing 21/08Price closing 28/08Var %
Telecom Italy0,36620,40089,45
Mediobanca6,99697,4386,3
Prysmian22,479823,866,14
Bper Bank2,27962,384,4
Unipol3,9944,153,91
Stmicroelectronics24,341925,273,81
Unicredit8,13668,4473,81
General Bank25,004525,722,86
General12,946113,242,27
Cnh Industrial6,53646,6842,26
Source: borsaitaliana.it

To emphasize that compared to the U.S. markets, the MIB index has not yet recovered from the February-March slump this year due to COVID is also evidenced by the overall ranking of the MIB TOP40s since the beginning of the year. Here are the performances:

As we can see only 11 out of 40 stocks are in the positive since the beginning of the year. It is a MIB that is still struggling to grow. But the market is unpredictable. We will see what happens in the coming weeks.

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