Week from 21 to 27 October 2019
While the Fed is expected to cut rates next week, upbeat earnings and apparent progress on the U.S.-China trade front gave the equity indices a clear boost over the week. The S&P500 ended up 1.22% at 3,022.55 flirting with its historical highs whereas the Nasdaq hit a record at 8,243.12 (+1.90% WTD). Europe and Asia moved in unison (MSCI EMU: +1.15% ; Nikkei: +1.37% ; Shangai Composite: +0.57%). Simultaneously, interest rates gradually increased (from 1.76% to 1.80% for the U.S. 10-Year Treasury yield, from -0.38% to -0.36% for the 10-Year German Bund) while gold gained almost 1%. U.S. high yield bonds (+0.37%) and emerging debt (+0.87% in local currencies) continued their winning streak.
Overall tech stocks drove the indices higher (sector up 2.49% WTD). Microsoft Corp. soared 2.42% after announcing a 14% revenue increase for the quarter ended September 30 (net income: +21%). In the same vein, Intel shares jumped 9.93% after third-quarter earnings beat the consensus forecast. It’s worth noting that the company sees more growth ahead. That being said, there was also bad news from Amazon with the first profit decline in two years and the loss of the Pentagon’s $10bn ‘war cloud’ contract (contract given to Amazon’s main rival, Microsoft!).
Energy (+4.33% WTD) fared well as WTI prices surged (+5.36%) thanks to a surprise draw on U.S. oil inventories.
By contrast, interest-rate sensitive stocks such utilities and REITs lagged behind the pack (+0.48% and -1.11%).
Find the full report here: https://www.trackinsight.com/weekly-flow-report/2019-10-25/global