Xinhua weekly review on global financial markets

Source: Xinhua| 2020-08-29 20:47:42|Editor: huaxia

BEIJING, Aug. 29 (Xinhua) -- Global financial markets wrapped up the week in a mixed note on Friday, with stocks worldwide closing with ups and downs amid various indicators weighing investor sentiment.

U.S. stocks finished higher on Friday with the S&P 500 hitting record high, as investors pored through upbeat U.S. consumer spending and the U.S. Federal Reserve's new policy strategy on inflation, which will likely keep short-term interest rates near zero for years.

The Dow Jones Industrial Average rose 161.60 points, or 0.57 percent, to 28,653.87. The S&P 500 increased 23.46 points, or 0.67 percent, to 3,508.01. The Nasdaq Composite Index climbed 70.30 points, or 0.60 percent, to 11,695.63.

Meanwhile, U.S.-listed Chinese companies traded mostly higher, with nine of the top 10 stocks by weight in the S&P U.S. Listed China 50 index ending the day on an upbeat note.

U.S. personal consumption expenditures rose 1.9 percent in July and personal income increased 0.4 percent, the U.S. Bureau of Economic Analysis reported on Friday.

"The consumer recovery continued in July, with solid growth in both income and spending," Chris Low, chief economist at FHN Financial, said in a note, adding "compensation was significantly higher than the February low, but still has about 5 percent to go before it fully recovers."

Fed Chairman Jerome Powell announced on Thursday that the central bank will seek to achieve inflation that averages 2 percent over time to help fight the COVID-19 pandemic and boost economic recovery.

"Average inflation targeting signals that the Fed will tolerate inflation moderately above 2% to make up for past undershoots, resulting in lower real interest rates and more accommodative monetary policy, all else equal," Sam Bullard and Michael Pugliese, economists at Wells Fargo Securities, wrote Thursday in an analysis.

"One thing does seem fairly certain amid these changes: the Fed seems unlikely to tighten monetary policy for quite a long time," they noted.

In Asia, Tokyo stocks closed lower Friday, as investor sentiment was dented by reports that Japanese Prime Minister Shinzo Abe would step down as the nation's leader due to health issues.

The 225-issue Nikkei Stock Average dropped 326.21 points, or 1.41 percent, from Thursday to close the day at 22,882.65.

The broader Topix index of all First Section issues on the Tokyo Stock Exchange, meanwhile, lost 11.02 points, or 0.68 percent, to finish at 1,604.87.

Market strategists said market concerns about a political vacuum, uncertainty over Abe's successor, as well as the government's relationship with the central bank, were evident as trade became circumspect as investors digested the reports, with Tokyo stocks known for garnering support when domestic politics is on a solid footing.

"Japanese stocks tend to do well under a long, stable government and that was especially the case for Abe. Foreign investors may also worry what will happen to the relationship between the government and the Bank of Japan," Takatoshi Itoshima, a strategist at Pictet Asset Management, was quoted as saying.

"Investors grew worried about who will succeed Abe. Whoever succeeds him, it will be tough to garner strong support and political uncertainties will likely weigh on markets," Shingo Ide, chief equity strategist at NLI Research Institute, was quoted as saying.

Ide added, "Uncertainty over relations with the United States under President Donald Trump has also prevailed."

Across Europe, stocks retreated across the board with most sectors of the pan-European Stoxx 600 sliding into a negative territory.

Seperately, British stocks decreased on Friday, with the benchmark FTSE 100 Index down by 0.61 percent, or 36.42 points, to close at 5,963.57 points.

Similarly, German stocks edged down on Friday, with the benchmark DAX index down 63.16 points, or 0.48 percent, to close at 13,033.20 points.

Yet, China's Haier, a leading global household appliances manufacturer listed in Frankfurt in 2018, added 1.32 percent to close at 0.74 euros per share on Friday.

In Latin America, the market was bouyed by Brazil's rising industrial confidence this month, which almost fully rebounded from the negative impact of the COVID-19 pandemic.

The Industrial Confidence Index in Brazil rose by 8.9 points in August to 98.7, recovering 93.8 percent of its lose in March and April, when the pandemic started to take hold, which also marks the fourth consecutively advancing month, according to the Getulio Vargas Foundation (FGV).

"Confidence in the industrial sector maintained the tendency toward recovery that began in recent months in a consistent and broad manner. Although they are still dissatisfied with the level of demand, the opinion of business owners about the business climate at the moment has increasingly gotten closer to the pre-pandemic period," FGV said.

"For the next few months, the expectations indicators show a certain optimism, with more than 40 percent of the sector forecasting an increase in the pace of production," the think tank said.

However, the recovery will not be enough to prevent the country's gross domestic product from falling by 5.46 percent this year, according to the financial analysts quoted by the Central Banks of Brazil. Enditem

(Xinhua reporters Pan Lijun in New York City; Gao Pan, Xiong Maoling, and Xu Yuan in Washington; Jon Day in Tokyo; Yang Xiaojing in London; Sun Yang, and Zuo Wei in Frankfurt also contributed to the story.)