Weekly Update – Market Cools Down as U.S.-China Tensions Heat Up

Weekly Performance

US: S&P 500 Index -1.38%, Dow -.71%, Nasdaq -2.1%
Europe: STOXX Europe 600 +1.07%, German DAX +1.19%, France CAC 40 +1.76%, U.K. FTSE 100 +2.02%
Asia: Japan Nikkei +.53%, China Shanghai Composite -1.19%, Korea KOSPI -.67%
Rates/Commodities: 10-Year Treasury yield +3 basis points to 2.77%, WTI crude oil -4.57%, COMEX gold +.62%

Another week of choppy trading left global markets struggling to stay afloat after Monday’s steep selloff in U.S. equities pushed major indexes into negative territory on the year. The weakness stemmed from ongoing concerns that the technology sector could at some point face increased regulation amid recent data breaches, as well as another round of tariff announcements out of China late Sunday. The bulls made a charge midweek but ultimately were disappointed as the bears moved in on Friday following monthly employment data that failed to impress, along with stepped-up protectionist rhetoric from both President Trump and Chinese officials following yet another round of tariffs from the latter and the potential for another $100 billion in import taxes under consideration by the former. However, Chief Investment Strategist John Lynch characterized the latest salvo in the U.S.—China trade spat as “a likely posturing tactic ahead of negotiations, although this increases the likelihood of additional market disruptions in the coming weeks.”

Next week will see relatively little on the economic calendar ahead of a much anticipated first quarter earnings season in the U.S., which kicks off on Thursday and Friday with J.P. Morgan, BlackRock, Wells Fargo, and Citigroup among the big banks reporting. On the data front, key U.S. releases include producer and consumer inflation data on Tuesday and Wednesday, respectively.  Thursday and Friday will see import/export data, the University of Michigan’s Consumer Sentiment report, and a series of appearances from Regional Federal Reserve Bank Presidents. Overseas, manufacturing and industrial production figures out of the Eurozone and inflation readings from Germany, France, and China, are among the data to watch.

 

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