It was a mostly upbeat week for global markets as investors moved back into the market, pushing regional equity indexes up and bond prices down. Monetary policy meetings were held by the central banks of Europe, England, Russia, and Turkey. The outcomes were mostly as expected, with the exception of Turkey, which succumbed to market pressure to increase rates amid soaring inflation. Still, traders looked mostly to economic data and developments in U.S.—China trade tensions for direction.
U.S. stocks gained amid a series of data that suggested the economy remains on firm footing. Reports showed consumer spending increasing, manufacturing strengthening, and small business optimism at record highs. However, the Federal Reserve’s Beige Book showed concerns around trade tensions have prompted some businesses to scale back or postpone spending. Investors turned cautiously optimistic later in the week after reports surfaced that U.S. trade officials were looking to arrange another round of trade talks with Chinese leaders ahead of the implementation of additional tariffs. Elsewhere, Treasury prices fell—pushing the yield on the benchmark 10-year note back above 3%—as money flowed back into riskier investments. Several catalysts, including weather-related concerns, led to a short-lived spike in oil prices.
Turning abroad, equity gains in Europe and Asia came amid choppy trading, though Japan’s Nikkei rallied more than 3% on the week on the heels of the U.S.—China trade developments, as well as yen weakness (a positive for its heavily export-oriented economy) and an upgrade of the government’s outlook for business spending. On the other hand, losses in Chinese stocks prevented a rebound in the broader emerging markets after the MSCI Emerging Markets Index fell into bear market territory last week, a topic we covered in this week’s Market Signals podcast. Addressing the potential trade talks, LPL chief investment strategist John Lynch noted "More U.S.—China trade negotiations may not stop another round of tariffs on Chinese goods from being implemented. However, the invitation does support the notion that tariffs are a means to an end for the U.S., not a desired outcome."
Next week, U.S. data to monitor include the Leading Economic Indicators Index on Thursday, Markit Manufacturing Purchasing Managers’ Index (PMI) slated for Friday, and several sets of housing data spread throughout the week. Overseas, PMI data will be released for Japan and the Eurozone, along with consumer inflation readings in both regions. Track these and other important events on our Weekly Global Economic & Policy Calendar.
IMPORTANT: The projections or other information generated by GWP regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. Results may vary with each use and over time.
Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.
Indices are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
Past performance is not indicative of future results. The tax loss harvesting and other tax strategies discussed should not be interpreted as tax advice and there is no representation that such strategies will result in any particular tax consequence. Clients should consult with their personal tax advisors regarding the tax consequences of investing.
Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security.
This research material has been prepared by LPL Financial LLC.
To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial LLC is not an affiliate of and makes no representation with respect to such entity.
Not FDIC/NCUA Insured | Not Bank/Credit Union Guaranteed | May Lose Value | Not Guaranteed by any Government Agency | Not a Bank/Credit Union Deposit
Securities and Advisory services offered through LPL Financial LLC, a Registered Investment Advisor Member FINRA/SIPC
For Client Use - Tracking #1- 766950 (Exp. 8/19)