Weekly Update 4/20/18 – Stocks Turn Midweek as Volatility Continues

US: S&P 500 Index +0.5%, Dow +.04%, Nasdaq +0.6%
Europe: STOXX Europe 600 +0.7%, German DAX +0.8%, France CAC 40 +1.8%, U.K. FTSE 100 +0.9%
Asia: Japan Nikkei +1.8%, China Shanghai Composite -2.8%, Korea KOSPI +0.9%
Rates/Commodities: 10-Year Treasury yield +13 basis points to 2.96%, WTI crude oil +1.5%, COMEX gold -0.8%

Global equities sold off Thursday and Friday after a hot start to the week, leaving stocks only modestly higher for the period. Earnings drove investor confidence early on, though reception to reports from major financials sector players was mixed. The market also shrugged off a U.S.-led strike on Syria over the weekend, and the continued escalation of the conflict led oil prices and the energy sector to the upside. Despite the late-week volatility, “recent market technical activity, including new highs on the advance/decline line, indicates the bottoming process may have concluded,” according to LPL Research Chief Investment Strategist John Lynch.

Overseas, more disappointing economic indicators came out of Europe, as Eurozone inflation (+1.3%) fell short of consensus expectations and the prior month (both +1.4%). China’s central bank announced a surprise cut in bank reserve requirements, and the country reported that gross domestic product (GDP) rose 6.8% in the first quarter, above consensus expectations. Overall the economic data continue to confirm our favorable view of emerging markets relative to foreign developed.

Next week, investors will get a global read on consumer sentiment and the business environment with Purchasing Managers’ Index and consumer confidence data due out of the U.S., Eurozone, France, Germany, and Japan. The U.S. economic calendar is also highlighted by new and existing home sales early in the week, followed by first quarter GDP and Core Personal Consumption Expenditures, the Federal Reserve’s preferred inflation measure, on Friday.  Finally, earnings season continues to ramp up with roughly one-third of S&P 500 companies scheduled to report. Stay tune to the next week for continued insights.

 

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