After having started the month on solid gains, global stocks treaded water for the second week of April that kicked off earnings season. The S&P500, Nasdaq and MSCI World indices managed to inch about 0.5 percent higher as the Fed’s minutes reaffirmed the central bank’s patience regarding future interest rate hikes. In this respect, it is worth noting that the annual inflation rate published by the U.S. Labor Department rose to 1.9 percent in March, slightly above the market consensus (1.8 percent). European stocks for their part showed virtually no change (MSCI EMU +0.16 percent, FTSE100 -0.09 percent) even though EU leaders have just granted the UK a six-month extension to Brexit. The UK must now hold European elections next month, or leave on 1 June without any deal…
Of the 11 major sectors in the S&P500, eight were in positive territory over the week. Financials remained the best performers (+2.09 percent WTD with the largest inflows per sector), led by JP Morgan Chase & Co (+5.6 percent WTD) which released its earnings for the first quarter of 2019 posting record profit and revenue. The consumer discretionary sector and communication services followed behind (+1.35 and +1.02 percent respectively). By contrast, the S&P healthcare sector fell 2.44 percent (the worst performer of the week with the largest outflows), dragged down by losses from Centene (-5.23 percent), UnitedHealth Group (-10.27 percent) and Anthem (-13.79 percent) more specifically, and hit by ongoing uncertainty about the fate of the Affordable Care Act and fears lawmakers may impose measures to cut drug prices. In the same vein, the Nasdaq Biotech index dipped by a hefty 3.51 percent. Information technology also weighted on the S&P500, though to a lesser extent (-0.54 percent).
Government bond yields increased modestly with the 10-year U.S. Treasury yield at 257bps (vs. 250bps the previous week) and the 10-year German Bund at 6bps while high yield bonds gained 0.57 percent (Bloomberg Barclays US Corporate High Yield TR Index) in a straight line since the beginning of the year.
Find the full report: https://www.trackinsight.com/weekly-flow-report/2019-04-12/global