Stocks surged on bets that the United States and China would strike a deal to put an end to their trade war. Indeed, it becomes a critical point as Chinese exports contracted strongly in December in the wake of tariff increases, pointing to further weakness in the world’s second-largest economy in 2019 and deteriorating global demand.
The S&P500 ended the week with a gain of 2.54 percent after robust U.S. jobs data and dovish comments on interest rates by Federal Reserve Chairman Jerome Powell. The weaker than expected ISM services report for the month of December and the partial U.S. government shutdown did not really weigh on sentiment ahead of earnings season.
European and Asian markets also fared well (MSCI EMU: +1.46 percent ; Nikkei225: +4.08 percent ; Hang Seng: +4.06 percent).
The trade-sensitive S&P industrials sector was logically the best performer (+4.09 percent) over the week, especially after Boeing Co reported it had delivered a record 806 aircraft last year. Energy also took the lead (+3.49 percent) as crude oil prices continued their winning streak (WTI: +5.67 percent WTD, +13.61 percent YTD). The consumer discretionary sector was the other winner of the week (+3.73 percent).
By contrast, financials (+1.04 percent), consumer staples (+0.79 percent), utilities (+0.84 percent) and information technology (+1.10 percent) significantly underperformed the market.
Lastly, there was little change in the U.S. Treasury bond yields, the 10-Year yield closing at around 270bps and the 2-Year at 255bps. On the other hand, high yield bonds took advantage of lower risk aversion (Markit iBoxx USD Liquid HY index up 1.68 percent WTD).
Find the full report here : https://www.trackinsight.com/weekly-flow-report/2019-01-11/global