For the third time in a row, MPs voted against Theresa May’s Brexit deal on Friday bringing the United Kingdom to the edge of political and institutional chaos with a strife-torn parliament and a British government which is now thoroughly discredited. However, neither the FTSE100 index nor the European indices (MSCI EMU) were really affected by this endless muddle since they simultaneously rose by 1 percent WTD.
In fact, stock markets were in a brighter mood mainly thanks to the manufacturing PMI index in China (above the 50 mark) and significant progress on the trade talks between the U.S. and China. In particular, it seems that intellectual property and currency manipulation issues have been addressed by both parties. Consequently, the S&P500 index gained 1.2 percent WTD, closing out the quarter with the best gains for the broader market in almost a decade.
The renewed optimism on the U.S.-China negotiations was clearly captured by trade-sensitive sectors starting with industrials (+2.86 percent WTD) and materials (+2.05 percent WTD), the best performers over the week.
Financials also rallied (+1.45 percent WTD) partly recovering the severe losses suffered last week as Treasury yields stabilized (U.S. 10-year at 241bps, German Bund at -7bps) and the spread between the yield on the 10-year note and the 3-month Treasury bill turned slightly positive (+3bps) in the U.S. after inverting a week ago for the first time in more than a decade.
Lastly, communication stocks and utilities were the exception to rally on Wall Street, both sectors finishing the week in the red (-0.30 and -0.51 percent respectively).
Find the full report here : https://www.trackinsight.com/weekly-flow-report/2019-03-29/global