US markets steadied to show weekly gains

European stocks rebounded 6% last week as volatility waned

Equity markets across European countries surged considerably during the previous week ended Aug 28, following a disastrous Aug 17-21 week. Market volatility declined noticeably, while markets were also inspired by positive fundamentals from the US. America’s second-quarter GDP was revised upwards from 2.3% to 3.7%, while analysts had suggested the economy grew by 3.2% only. In addition, September IFO business climate index in Germany climbed more than expected to 108.3 points, up from 108 in August.

The benchmark Eurostoxx 600 Index finished the reported period with a rally of 6.2% to 363.28 points, while it opened the week at just 353.55 points. Both German DAX 30 and FTSE 100 indicators were trading positively along with their pan-European gauge, as they surged 6.7% and 5.9%, respectively. The former returned back above the 10,000 points’ threshold, while the main British stock index rebounded beyond the 6,000 mark. A Spanish-based technological solutions’ company Abengoa SA advanced the most last week, as the company’s Class B shares added 40% to 1.06 euros. The second and third best performers were Paddy Power Plc and Betfair Group Plc, respectively. These two companies have agreed to merge, resulting in their stock appreciation of about 23%. Meanwhile, a Netherlands-based smart card and mobile chip manufacturer Gemalto dipped the most by 13.3% to 62.83 euros per share, as the company announced that a closure of its American mobile transaction service Softcard will hit this year’s second-half revenues of the parent company.

US markets steadied to show weekly gains

US share market was trading in green last week, following positive changes registered earlier in Asia and Europe. It seems that fears over the Chinese economic slowdown were somewhat overshadowed by quite optimistic fundamentals from inside the US. According to the preliminary estimate, the world’s biggest economy advanced 3.7% in the second quarter of this year, growing ahead of any expectations. Moreover, better-than-forecasted increase in US durable goods orders fuelled market optimism that the economy is strong enough to withstand weakness abroad.

All of major US indexes added more than 4.8% during the observed period. NASDAQ led gains with a rise of 6.7% to 4,828.33 points, while S&P 500 and DJIA followed with a jump of 5% and 4.9%, correspondingly. However, none of them were able to erode all losses that have occurred recently. Only the high-tech NASDAQ index is up year-to-date by 6% so far, as the others are still in red. Among the biggest market makers, Cameron International Corp was up 47.8% to trade at $65 per share. A producer of oil and gas-extracting equipment was positively influenced by rebounding oil prices on Thursday and Friday. Meanwhile, Best Buy Inc rallied 19.2% to $35.97 by the exchange closing time on Friday. The electronics’ retailer managed to increase its same-store sales for a fourth consecutive quarter. On the side of weekly losers, Pepco Holdings Inc, an energy company, slumped 14.9% to $23.01 amid a US-regulator’s rejection of a $6.8 billion takeover bid from the company’s competitor Exelon Corp.

Chinese equities registered modest increase as confidence revives

Asian stocks were considered to be the main benchmarks for global equities to rally last week. Despite an overall growth, Hong Kong and New Zealand stock markets decided to refrain from substantial gains. Economists are assessing perspectives of Chinese economic growth in the foreseeable future, but optimism seems to be limited in the context of a stock rout seen in the middle of August.

Only Australian equities managed to rally in course of the previous working week, by jumping more than 5% before the Reserve Bank is meeting this week. On the contrary, Hang Seng added just 1.7% to 21,612.39 points, while the New Zealand’s key index NZX 50 was up just 1.1% 5,670.48 points in five trading days through Aug 28. Nonetheless, all three major Asian indexes are still hovering strongly in red on a monthly and quarterly basis, with Hang Seng alone being down 21.2% over the past three months. By mentioning the performance of separate industries, which are the components of S&P/ASX 200 Index, it is worth underlining that only telecommunications failed to sustain positive trend and therefore dropped 0.75% last week, while others traded firmly in the green zone. Both energy and basic materials added more than 8% amid rebounding oil prices. Despite that, the best performer was a representative of another industry. Pacific Brands Ltd, a managing company for different consumer brands, climbed 40% to $A0.56. The company’s officials said it will pay the first dividend since March 2014, despite posting a net loss for the year ended June 30, 2015.

EXPLANATIONS

Indexes

• Standard & Poor's 500 Index (S&P 500) or (SPX) - U.S. stock market index consisting of the 500 large-cap shares widely traded on the New York Stock Exchange and the NASDAQ.

• Dow Jones Industrial Average Index (INDU) - U.S. stock market index consisting of the 30 large publicly owned U.S. companies , primarily industrials

• NASDAQ Composite Index - U.S. stock market index representing all the stocks that are traded on the Nasdaq stock market, mostly technology and Internet-related

• New Zealand Exchange 50 Gross Index (NZX 50) - stock market index consisting of the top 50 companies listed on the New Zealand Stock exchange

• S&P/ASX 200 -a market-capitalization weighted stock market index of stocks listed on the Australian Securities Exchange from Standard and Poor’s

• Hang Seng Index (HI) - Hong Kong’s stock market index consisting of 48 largest companies listed on the Hong Kong Exchange

• Japan’s Nikkei Stock Average (Nikkei 225 Index) or (NKY) - Japanese stock market index consisting of the 225 largest companies listed on Tokyo Stock Exchange

• FTSE 100 Index (UKX) - U.K. stock market index consisting of the 100 most capitalized U.K. companies trading on the London Stock Exchange

• DAX Index (DAX) - German stock market index consisting of the 30 largest and most liquid German companies trading on the Frankfurt Stock Exchange

• Eurostoxx 600 - stock market index, derived from the Stoxx Europe Total Market Index, consisting of 600 large, mid– and small-sized companies from 18 European countries

Chart

• Correlation - statistical measure of the linear relationship between two random variables. It is defined as the covariance divided by the standard deviation of two variables.

• Historical price changes - chart reflecting the historical price changes of particular region’s stock indices

Indicators

• Industry performance - weekly performance of industries within the particular stock market index

• Top performers - companies within a particular stock market index showing the best or worst weekly performance

• Performance - relative historical change of stock market index value