The rout in shares of technology and internet-related companies (S&P BSE IT index down 4.11 percent WTD) prompted a wave of selling across the broader market last week. The S&P 500 fell 3.79 percent and turned negative for the year while the MSCI World dropped by 2.79 percent. Conflicting signals between the United States and China on their trade dispute added to worries for Wall Street. To make matters worse, data released on Monday showed U.S. home builder sentiment recorded its steepest one-month drop in over 4-1/2 years. Furthermore retailers, including Target and Kohl’s, reported weak earnings (consumer discretionary sector down 4.3 percent). Oil prices continued to lose steam (WTI down 10.7 percent, i.e. -32.18 percent over the last seven weeks) as fears about slower global demand and a surge in U.S. production outweighed expected supply cuts by the OPEC. Unsurprisingly, the energy sector was the worst performer last week (-5.12 percent).
In the meantime, the long-term U.S. Treasury yields were at a standstill (10-Year T-bond yield at 3.04 percent).
Asian and European stock markets skidded too, pressured by sharp losses on U.S. equities and growing concerns about slackening demand (MSCI EMU: -1.64 percent, MSCI All China-HK-Taiwan: -2.40 percent) as evidenced by the IFO Business Climate Index in Germany which fell from the revised level of 102.9 points a month earlier to 102.0 points in November. Together with other statistical indicators, such results point to 0.3 percent economic growth in the fourth quarter at most.
Lastly, the prospect of an agreement on the UK’s withdrawal from the EU did not appear to be a great deal of interest among investors (FTSE: -0.80 percent over the week). It should be noted that this agreement needs to be ratified by the UK Parliament in December but its approval is far from guaranteed.
Find the full report here : https://www.trackinsight.com/weekly-flow-report/2018-11-23/global