Weekly Update – Markets Struggle to Back Up Prior Week Gains

Weekly Performance

US: S&P 500 Index -1.24%, Dow -1.56%, Nasdaq -1.04%
Europe: STOXX Europe 600 -0.14%, German DAX +0.35%, France CAC 40 +0.16%, U.K. FTSE 100 -1.17%
Asia: Japan Nikkei +0.97%, China Shanghai Composite -1.13%, Korea KOSPI +1.40%
Rates/Commodities: 10-Year Treasury yield -4 basis points to 2.85%, WTI crude oil +0.40%, COMEX gold -0.84%

Global equity markets struggled finding reasons to move higher after investors started the week digesting an announcement from the Trump administration that it intends to levy more tariffs, this time on China; meanwhile, European Union officials are gearing up for possible confrontations with the U.S. over the recently enacted tariffs on aluminum and steel. Elsewhere, United States economic data failed to buoy markets with better-than-expected consumer sentiment and small business optimism offset by a third straight decline in monthly retails sales and declines in building permits and housing starts. In-line consumer and producer inflation was a positive development with little market impact.

European investors also got a series of inflation data across the region that largely met expectations but failed to instill confidence that consumer price increases will hit central banks’ 2% target over the near term. In Asia, early-week strength in Japanese stocks kept major indexes above water as equities lost momentum amid a deepening scandal involving the sale of government land. Meanwhile, major indexes in China gave back most of their prior-week gains amid trepidation over the U.S.’ new tariffs.

Looking ahead, the U.S. docket includes new and existing home sales, the Leading Economic Index, the Kansas City Fed Manufacturing, and durable goods orders. However, investors’ focus will be on the Federal Reserve’s monetary policy meeting on Tuesday and Wednesday, where analysts expect a 0.25% rate hike announcement. Overseas, manufacturing and services Purchasing Managers Index reports for the Eurozone, France, and Germany should garner attention; as well as ZEW surveys for the Eurozone and Germany. In the pacific region, Japan is set to release a series of economic data covering trade, inflation, and manufacturing; while China reports foreign direct investment and property prices, a closely watched metric tied to the health of the Chinese consumer.


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