Weekly Market Drivers | LPL Financial Research

Late-Week Gains Gush U.S. Equities Into Positive Territory

US: S&P 500 Index +0.5%, Dow -0.1%, Nasdaq +0.6%
Europe: STOXX Europe 600 -0.18%, German DAX -0.1% France CAC 40 +0.5%, U.K. FTSE 100 -0.4%
Asia: Japan Nikkei +0.3%, China Shanghai Composite -1.8% Korea KOSPI +1/1%
Rates/Commodities: 10-Year Treasury yield +7 basis points to 2.56%, WTI crude oil +0.8%, COMEX gold: +0.0%

U.S. stocks traded in a tight range this week before a string of bank earnings on Friday boosted the S&P 500 Index comfortably into positive territory.

Solid labor market data and indications that the U.S.-China may have made progress on trade enforcement hurdles fueled bullish sentiment on the U.S. economy, pushing Treasury prices down and steepening the yield curve. Nine of 11 equity sectors advanced, though weakness in healthcare stocks kept index gains in check.

European stocks failed to advance on the week as structural and political issues continued to weigh on investors. Following a European Central Bank (ECB) meeting that concluded Wednesday, President Mario Draghi acknowledged that risks to the ECB’s growth outlook for the region remain to the downside, while Italian officials announced that the country’s budget deficit would exceed levels agreed upon with the European Union back in December. At the same time, Italy’s finance ministry cut its economic growth forecast for this year to 0.2%. Both announcements coincided with the International Monetary Fund reducing its 2019 global growth forecast to 3.3%, its third cut since October of last year. “We have been cautious on Europe’s growth potential for a while now given political turmoil and tenuous economic conditions,” said LPL Chief Investment Strategist John Lynch. “Overall, we still recommend U.S. and emerging market equities over developed-market stocks.”

Looking to the week ahead, first quarter earnings season ramps up with 48 S&P 500 companies scheduled to report. On the economic front, manufacturing, retail sales and Leading Index data will draw much of the attention in the U.S. Overseas, Purchasing Managers’ Index data will be the focal point of the European docket with France, Germany and the composite Eurozone all reporting. In Asia, Chinese gross domestic product and Japanese industrial production are also scheduled to be released. Track these and other important events on our Weekly Global Economic & Policy Calendar.

 

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