Recap: Week Ending October 3, 2014
Equity markets across the globe felt selling pressure yet again last week as September came to a close. Selling appears to have come from a variety of avenues including, the global Ebola outbreak as well as an uprising of protestors in Hong Kong. On top of the current events, major economic indicators came out this week including an interest rate announcement from the European Central Bank, ECB, and a much stronger than expected US unemployment picture. Equities in the US were led lower by the Russell 2000 Small Cap Index, which closed 1.3% lower on the week. The recent sell-off in equities can be attributed to a weaker Russell, who has dragged down other major indexes including the Dow Jones Industrial Average, S&P 500 and NASDAQ 100. The Toronto Stock Exchange Composite Index, TSX, faired much worse out of all North American indexes closing down over 1.5% for the week. Both gold and crude oil, which are big components of the companies that list on the TSX, have taken a hit recently which has in turn sent many commodity-based companies lower.
Last week a person with Ebola was detected in Texas after returning from recently visiting Africa. This caused a scare among many as until recently this person did not know he had Ebola. Even though, Ebola is difficult to transfer and requires coming in contact with bodily fluids, many people have become uneasy. Currently, there is no cure for Ebola; however, there is a drug that is currently being tests that have shown positive results. This possible cure is created by Tekmira Pharmaceuticals, which is a Canadian based company and trades publically on both the TSX and NASDAQ. Following the announcement of a possible cure, Tekmira skyrocketed from trading below $9 in the middle of July to closing Friday just shy of $30. The performance of the stock is remarkable considering that the drug is not yet been officially proven to provide a cure and is not yet mass produced. With this being said, if and when this drug does get official approval, the effects on the stock price could be vast.
Friday saw the announcement of the most recent US unemployment report. US nationwide unemployment came in at 5.9% for the month of September, beating both the consensus and previous reading of 6.1%. At first the market was unsure of the figure, however, caught a bid throughout the day pushing the Dow Jones higher by 1.24% on the day. The market preliminarily saw the beat as uneasy as an improvement in the unemployment picture could lead to a sooner rise in rates. On Wednesday of this week, the US Federal Reserve will release their minutes from its most recent meeting which will shine a light on the outlook of interest rates in the US.
Other news that rocked the markets this week was the uprising of protestors in Hong Kong. Protestors are fighting to have a say in who they are voting for. Currently the Standing Committee of the National People’s Congress, NPCSC, decides who will run in elections; however, citizens feel they have the right to have civilian nominations for their political representatives. These protests have not and are not expected to spill into other major cities around the world.
