U.S. Stocks Led Global Rally Last Week
James Picerno | Aug 31, 2020 07:15AM ET
US shares led a global rally for the trading week ended Aug. 28, based on a set of exchange-traded funds. With the exception of investment-grade bonds in the US, risk-on sentiment lifted every corner of the major asset classes.
Leading the gains: Vanguard Total Stock Market Index Fund (NYSE:VTI), which rallied 3.2%. The rise marked the fund’s fifth straight weekly advance. With one trading day left in August, equities in America are on track to post the month’s strongest gain in over three decades.
Stocks in emerging markets and an equal-weighted measure of a broad set of commodities posted the second- and third-strongest gains, respectively, last week.
Former Indian central banker Raghuram Rajan says that the Federal Reserve’s announcement last week that it was adjusting its monetary policy to focus on average inflation targeting and keeping interest rates lower for longer is bullish for economies in the developing world. “The Fed has bought some room for the emerging markets,” he tells Bloomberg.
Last week’s biggest (and only) loser among the major asset classes: investment-grade bonds in the Vanguard Total Bond Market (NASDAQ:BND) lost 0.6%-the fund’s second weekly decline in the past three. At the close of trading on Friday, BND was close to a two-month low.
The Global Markets Index (GMI) continued to rise, marking its ninth straight weekly increase. This unmanaged benchmark, which holds all the major asset classes (except cash) in market-value weights via ETFs, rallied 1.9%.
For the one-year trend, US stocks continued to solidify their leadership position. Vanguard Total US Stock Market ended last week with a 23.1% total return over the trailing 12-month period – well ahead of the rest of the field.
Property shares in the US and foreign markets are posting the only one-year losses at the moment. Leading on the downside: Vanguard Global ex-U.S. Real Estate Index (NASDAQ:VNQI), which closed with a 7.1% decline on Friday vs. the year-ago price on a total-return basis.
Get The News You Want
GMI, by contrast, is up with a strong 13.5% gain for the trailing one-year window.
Ranking asset classes based on current drawdown continues to show that a broad measure of commodities has the deepest peak-to-trough decline. WisdomTree Continuous Commodity Index (NYSE:GCC), which tracks the Thomson Reuters Equal Weight Continuous Commodity Total Return Index, is currently posting a 44.1% drawdown.
GMI, on the other hand, ended last week with a zero drawdown.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.