Broker Check

September 4, 2018 - Trade Returns to the Spotlight

| September 04, 2018

Trade negotiations between the U.S. and several of its key trading partners returned to center stage this week. Progress was mixed, as were global stocks’ performance. Investors had an appetite for risk early in the week when an announcement was made that the U.S. and Mexico struck a trade deal, which was followed by concessions to the U.S. from both Canada and the European Union (EU) in an effort to advance their respective negotiations.

Strength in the technology sector propelled U.S. equities higher, with the Nasdaq Composite crossing the 8,000 level, while the S&P 500 Index moved further into record territory on its way to notching a fifth straight monthly gain, finishing the usually tricky month of August up more than 3%.

Abroad, European equities gained earlier in the week, led by banks and auto-related firms that stand to benefit from the new trade terms between the U.S. and Mexico. These gains slipped away later in the week after President Trump indicated the EU’s proposal to scrap tariffs on all industrial-related goods (including autos) was insufficient. Adding to the selling pressure was weaker-than-expected regional inflation data and reports showing a deterioration in the business climate and economic confidence. Stocks in Asia held up better than their European counterparts with major indexes in Japan, India, and Korea finishing the week up more than 1%. Emerging-market stocks also posted a weekly gain, as an unexpected pickup in Chinese manufacturing activity helped to offset news that President Trump intends to proceed with levying tariffs on an additional $200 billion in Chinese imports. On China, LPL chief investment strategist John Lynch noted "The data indicate that China’s economy remains in expansionary territory, but it may be starting to feel the impact of U.S. tariffs with export orders declining for a third straight month. That, combined with President Trump’s announcement to add levies to an additional $200 billion in imports, could compel China to restart negotiations in earnest. We continue to expect the two sides to reach an agreement."

Amid a holiday-shortened week in the U.S., Friday’s monthly nonfarm payrolls report is the highlight of the economic docket. Services and manufacturing data due out in the U.S., Eurozone, and Japan will also help investors gauge the health of the global economy. 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 FINRASIPC /

For Client Use - Tracking #1- 766950 (Exp. 8/19)