Weekly Update— Brexit Back in the Spotlight

US: S&P 500 Index -1.6%, Dow -2.2%, Nasdaq -2.2%
Europe: STOXX Europe 600 -2.2%, German DAX -1.63% France CAC 40 -1.6%, U.K. FTSE 100 -1.0%
Asia: Japan Nikkei -2.6%, China Shanghai Composite +3.1%, Korea KOSPI  +0.3%
Rates/Commodities: 10-Year Treasury yield -12 basis points to 3.07%, WTI crude oil -6.23%, COMEX gold +0.3%

U.S. equities moved lower for the week, but ended on a high note as the S&P 500 Index broke a five-day losing streak on Thursday and then closed higher Friday as well, partly boosted by positive comments on U.S.-China trade talks. Oil snapped a record 12-day losing streak on Thursday, but falling prices continued to drag on the energy sector, while technology underperformed once again amid disappointing earnings reports from several high-profile names and a continued slide in heavily-weighted Apple. On the economic front, retail sales reversed a two-month downturn, though retail control-group sales, which are used to calculate gross domestic product, slightly missed estimates. Nevertheless, as LPL Chief Investment Strategist John Lynch noted, “We still believe that the U.S. consumer is the healthiest in years, aided by fiscal stimulus and modestly accelerating wages, and strong consumer demand will drive growth going forward.”

Overseas, Brexit took center stage with officials reaching a tentative plan for the U.K.’s withdrawal from the European Union following more than a year of negotiations. However, regional stock indexes dropped more than 2% on the week amid a resurgence in uncertainty tied to the deal. Investors’ angst stemmed from Prime Minister Theresa May’s struggles to gain buy-in for her “final” plan with multiple members of her own party stepping down since it was unveiled, including Brexit Secretary Raab. In Asia, Chinese stocks finished up more than 3%, buoying emerging markets, after government officials stepped up policy support following a series of data that showed its economy is under increasing downward pressure.

Turning to the week of Thanksgiving, we’ll get several sets of U.S. housing market data, along with the Conference Board’s Leading Economic Index. Abroad, manufacturing and services Markit Purchasing Managers’ Index releases will be coming out of Japan, Germany, France, and the composite Eurozone. Track these and other important events on our Weekly Global Economic & Policy Calendar.

 

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