2H September Global Market Recap
16th September 2020 – 30th September 2020
Stock market seesawed in the second half of September. A second wave of coronavirus, absence of follow-up stimulus packages, escalated political tensions as well as upcoming US president election all contributed to the volatility. Stocks in China and Hong Kong tumbled where most indexes fell more than 5%, with small cap stocks hit the hardest. Three US indexes were on track for the first monthly drops since March, with Nasdaq lost over 5%, S&P down nearly 4% and The Down Jones down 2%.
The treasury markets have shown some slight volatility in the second half of September without any extreme movements. Most of the ten-year government bond yields fell with only the Chinese and Malaysian ten-year yields rising. US rates across the yield curve have fallen after the Federal Reserve gave a forward guidance on maintaining the average inflation rate at 2% over time.
Various countries CDS index has spiked in the second half of September, returning to the July levels, and marking the first major rise since the middle of June. LIBOR-OIS spread continued to remain narrow despite the widening of CDS spreads.
The USD dollar Index rose in the second half of September as U.S. investors were concerned about the ability of U.S. Congress to reach an agreement for more fiscal stimulus. The strengthening USD has put downward pressures on oil and precious metals. Gold prices fell by 4% after the strong rise since late June. Silver shrank by 17.4% in September while still up 33% year to date. Crude oil prices have continued to decline since the middle of September after the short rise in the earlier of the month.