Market Update: Thurs, July 25, 2019 | LPL Financial Research

LPLResearch-Macro-View

Daily Insights

ECB talks potential cuts as Eurozone slowdown deepens. The European Central Bank (ECB) signaled added monetary policy support is likely on the way following the conclusion of its latest policy meeting this morning. While a new round of bond purchases, known as “quantitative easing,” was expected, new language was also added to the policy statement that rates would be held at “the present level or lower,” signaling an increased likelihood of a rate cut into negative territory in September. Recent data confirmed a deepening slowdown in the Eurozone economy at the same time that risk of a no-deal Brexit increased with the installation of Boris Johnson as the United Kingdom’s new prime minister.

Manufacturing slides again. Markit’s Purchasing Managers’ Index (PMI) fell to 50 this month, the threshold between expansionary and contractionary territory, for the first time since 2009. The data is preliminary, and we typically view the Institute for Supply Management’s PMI gauge as the benchmark for U.S. manufacturing health. Still, global manufacturing has been especially sensitive to trade uncertainty over the past year, and signs of deterioration align with multi-year lows in international PMIs.

Business spending rebounds. New orders for nondefense capital goods (excluding aircraft), a gauge of future business spending, jumped 1.9% month over month, its biggest rebound in 16 months. New orders have been muted for most of this year as companies have shelved expansion plans amid trade uncertainty. Increasing growth in capital expenditures is a key part of our economic outlook, so we are encouraged to see a possible resurgence in investment.

Financials posed for a breakout. After a disappointing start to the year, financials were the top-performing sector in the second quarter. Technical analysis suggests they may have more room to run, as we’ll explain on today’s LPL Research blog.

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.

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.

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 that is not an LPL Financial affiliate, please note LPL Financial makes no representation with respect to such entity.

  • Not Insured by FDIC/NCUA or Any Other Government Agency
  • Not Bank/Credit Union Guaranteed
  • Not Bank/Credit Union Deposits or Obligations
  • May Lose Value

 

Member FINRA/SIPC

For Public Use – Tracking # 1-876271