Market Update: Thurs, June 27, 2019 | LPL Financial Research

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Daily Insights

Stocks opened higher ahead of G20. All eyes are focused on Osaka, Japan, as President Trump prepares to meet with President Xi to work toward a U.S.-China trade agreement. Earlier gains were pared after reports that the list of China’s demands will include a lift of the ban of technology product sales to Huawei. We expect the meeting to be followed by more talks, but a major breakthrough apears unlikely. Meanwhile, Boeing shares had a weighted effect on the Dow Industrials and overnight gains in Europe were erased after weak European confidence data.

EM setting the economic pace globally. As discussed in our just-released Midyear Outlook 2019, we expect emerging markets (EM) to continue to lead global economic growth. International economies face a host of challenges, including Brexit, political discourse in France, manufacturing weakness in Germany, and difficult budget negotiations in Italy. In Japan, true structural reforms remain elusive and the value-added tax (VAT) increase is scheduled for the fourth quarter, which places that country’s fragile expansion in jeopardy.

Markets starting to recognize value in EM equities. Since May 17, the MSCI EM Index has returned 6%, ahead of both the MSCI EAFE Index (2.7%) and S&P 500 Index (2.1%). We believe the EM outlook is supported by several factors, in addition to renewed optimism about an eventual trade deal: 1) Beijing is implementing stimulus to support its economy, with the possibility of more to come; 2) key EM countries enjoy better demographics/population growth; 3) production flexibility has improved; 4) economic momentum is solid; 5) valuations are attractive; and 6) the U.S. dollar has weakened in conjunction with a more accommodative Federal Reserve. We continue to recommend an allocation to EM equities for suitable investors. For more on our global economic growth outlook for the rest of this year, see today’s LPL Research blog featuring LPL Midyear Outlook content.

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Click Here for our detailed Weekly Economic Calendar

Thursday

  • GDP Report (Third Revision, Q1)
  • Initial Jobless Claims (June 22)
  • Pending Home Sales (May)
  • Eurozone Economic Confidence Index (June)
  • Japan Jobless Rate (May)
  • Japan Industrial Production (Preliminary, May)

Friday

  • Personal Income (May)
  • Core PCE (May)
  • University of Michigan Sentiment Index (June)
  • UK GDP Report (Q1)
  • Eurozone CPI Report (Preliminary, June)

IMPORTANT DISCLOSURES

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The economic forecasts set forth in this material may not develop as predicted.

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Because of their narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies.

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.

All company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.

All performance referenced is historical and is no guarantee of future results.

This research material has been prepared by LPL Financial LLC.

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