Quarter 3 Performance Review 2020

Equities

The third quarter of 2020 saw continued recovery in global equities, though the pace moderated compared to Q2. Market sentiment was buoyed by ongoing economic recovery, positive earnings reports, and hopes for a COVID-19 vaccine, despite concerns over rising infection rates and geopolitical tensions.

1. S&P 500: The S&P 500 gained around 8% in Q3. The index reached new all-time highs in early September, driven by strong performances in the technology and consumer discretionary sectors. However, volatility increased towards the end of the quarter amid uncertainties about further fiscal stimulus and the upcoming U.S. presidential election.

2. Dow Jones Industrial Average (DJIA): The DJIA rose about 7% during Q3. The index benefitted from gains in industrial and financial stocks, reflecting broader economic recovery. Despite this, the pace of gains slowed as investors weighed the impact of potential delays in additional government stimulus.

3. Nasdaq Composite: The Nasdaq continued to outperform, rising nearly 11% in Q3. Tech giants like Apple, Amazon, and Tesla saw significant gains, bolstered by strong earnings and continued demand for digital services. The index experienced some pullback in September due to profit-taking and valuation concerns but remained robust overall.

Commodities

The commodities market in Q3 2020 experienced diverse trends, with continued recovery in some areas while others faced new challenges:

1. Crude Oil: Oil prices remained volatile but relatively stable, fluctuating between $35 and $45 per barrel. The demand recovery slowed down due to renewed lockdown measures in some regions and lingering concerns about oversupply. By the end of Q3, crude oil was trading around $40 per barrel.

2. Gold: Gold prices continued their upward trend, albeit at a slower pace compared to previous quarters. Starting at approximately $1,800 per ounce, gold peaked at around $2,070 in early August before stabilizing to about $1,900 by the end of September. Persistent economic uncertainties and a weaker U.S. dollar supported gold prices.

3. Silver: Silver mirrored gold's trajectory with notable volatility. Prices began the quarter near $18 per ounce, surged to almost $30 in early August, and then settled around $24 by the end of Q3. The metal benefitted from both its safe-haven appeal and industrial demand prospects as the economy showed signs of recovery.

4. Copper: Copper prices continued to rise, reflecting optimism about global economic recovery, particularly in China. Starting Q3 at about $2.70 per pound, copper climbed to approximately $3.00 by the end of September. Strong industrial demand and supply concerns contributed to this bullish trend.

Summary

Q3 2020 was characterized by continued, albeit more moderated, recovery in equities and mixed performance in commodities. Equities maintained their upward momentum, driven by strong corporate earnings, economic recovery, and hopes for a COVID-19 vaccine, despite rising market volatility towards the end of the quarter. Commodities experienced varied performances: oil prices stabilized but remained under pressure, while precious metals like gold and silver saw gains, driven by economic uncertainty and safe-haven demand. Copper showed strong recovery signs, buoyed by improving industrial demand and positive economic data from key markets like China. Overall, Q3 reflected cautious optimism with underlying concerns about the pandemic's long-term economic impact.