Week from 14 to 20 October 2019
Overall, stocks eventually finished the week in positive territory (S&P500: +0.54%, MSCI EMU: +0.32% ; Nikkei: +3.18%, MSCI EM: +1.23%, MSCI All China: +0.22%) though a number of events should have spooked investors away from the equity markets.
First, the United States imposed tariffs on $7.5bn of goods it imports from the EU on Friday, despite threats of retaliation. Second, China’s third-quarter economic growth slowed more than expected and to its weakest pace in almost three decades, a new sign of the damage already done by the Sino-U.S. trade fight to the global economy. Third, U.S. retail sales contracted in September (-0.3% even though economists polled by Reuters had forecast they would climb 0.3%!) for the first time in seven months, according to the Commerce Department. Lastly, the UK Parliament voted for a controversial amendment on Saturday to hold off approval for the prime minister’s new Brexit deal. Another day of twists and turns in the endless Brexit saga.
Of the 11 major sectors in the S&P 500, four were trading in negative territory. Energy suffered the largest percentage losses (-1.72% WTD as WTI futures were extending declines: -1.68%). Tech stocks slid -0.86%, led by Microsoft Inc (-1.63%), while consumer staples (despite the Coca-Cola boost whose shares gained 1.7% after the beverage maker beat analysts’ expectations for quarterly sales) and utilities inched lower (-0.16% and -0.14% respectively).
By contrast, healthcare (+2.03%) and financials (+1.55%) took the lead with strong earnings reports from UnitedHealth and JPMorgan Chase. There was also considerable strength in real estate (+1.8%), as interest rates, on the whole, did not change much.
Thus, the U.S. 10-Year Treasury yield was perfectly stable (1.76%) over the week. The 10-Year German Bund yield inched up from -0.44% to -0.38%. High yield bonds and emerging debt repeated last week’s performance (in the range of +0.21%/+0.52%). IG Corporate bonds fared well in the U.S. (+0.54%) but were treading water in Europe (-0.1%).
Find the full report here: https://www.trackinsight.com/weekly-flow-report/2019-10-18/global