Overall, large cap indices in local currency were up last week as Trump and Juncker were seeking to avert a looming trade war between the U.S. and Europe. Their meeting at the White House offset concerns about mixed earnings from a number of U.S. corporates (GM, AT&T, Boeing, …). For once, disappointing quarterly earnings also came from tech firms: Intel Corp, Twitter, … and last but not least Facebook whose stock lost roughly one-fifth of its value after the company warned of a sharp slowdown in sales growth and higher invesment costs in “safety, security and privacy”. Unsurprinsigly, the weekly net flow to this sector was negative. The same was true of energy stocks in the wake of relatively low oil prices: they have declined by 7.4 percent on a MTD basis.
From a geographic perspective, U.S. equity funds were the biggest beneficiaries of global capital flows though their European peers outperformed them.
On the interest rate front, the 10-Year US Treasury yield took a turn higher (from 289bp to 298bp) after the U.S. economy grew at an annual rate of 4.1 percent in the second quarter. This estimate was almost in line with the consensus forecast (4.2 percent). It should validate the Fed’s decision to keep a tighter monetary policy with two other rate hikes by the end of the year.
Find the full report here : https://www.trackinsight.com/weekly-flow-report/2018-07-27/global