Market Update: Thurs, Sep 26, 2019 | LPL Financial Research

Daily Insights

Stocks rebound. On Wednesday, the S&P 500 Index rebounded from its worst selloff in a month, rising 0.6% after the United States announced a trade agreement with Japan, and President Trump signaled that a U.S.-China trade deal could happen “sooner than you think.” Today, U.S. stocks are modestly lower as political uncertainty grows, although the S&P 500 is still near record highs.

Germany nearing recession. The German economy, typically a key growth engine for Europe, is sputtering. After contracting modestly in the second quarter, German gross domestic product (GDP) is expected to grow only 0.1% in both the third and fourth quarters of 2019, based on Bloomberg consensus forecasts. A gauge of Germany’s manufacturing health has also fallen deep into recessionary territory, reaching the lowest level in 10 years this month. We’ll dig more into Germany’s economic outlook today on the LPL Research blog.

Still cautious on European equities. With Germany on the cusp of recession, it is difficult to be more positive on investing in Europe right now. Growth has been better in France and Spain, and some of the weakness in the German economy has been related to new auto emissions standards and therefore presumably temporary. However, the continent is still struggling with rising populism, deficits, and exhausted monetary policy, while possible tariffs on German autos remain a risk.

 

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