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.
- 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)
- Personal Income (May)
- Core PCE (May)
- University of Michigan Sentiment Index (June)
- UK GDP Report (Q1)
- Eurozone CPI Report (Preliminary, June)
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.
All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.
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.
Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL is not an affiliate of and makes no representation with respect to such entity.
If your advisor is located at a bank or credit union, please note that the bank/credit union is not registered as a broker-dealer or investment advisor. Registered representatives of LPL may also be employees of the bank/credit union. These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, the bank/credit union. Securities and insurance offered through LPL or its affiliates are:
|Not FDIC or NCUA/NCUSIF Insured | No Bank or Credit Union Guarantee | May Lose Value | Not Guaranteed by Any Government Agency | Not a Bank/Credit Union Deposit|
Index data obtained via FactSet
For Public Use – Tracking # 1-867498 (6/20)