Weekly Market Commentary

09 Dec 2019

Key Highlights

•	Economic fundamentals stole the spotlight from trade-deal expectations last week, driving global stocks higher.
•	The state-controlled Saudi Arabian Oil Company, commonly known as Aramco, raised $25.6 billion late in the week in the world’s largest initial public offering (IPO).

Equities

• Developed Markets
• Emerging Markets

•	The major benchmarks ended mixed for the week after a strong jobs report helped compensate for worrisome signals on the trade front. The smaller-cap benchmarks fared best for a second consecutive week.
•	Within the S&P 500 Index, the consumer staples sector outperformed, helped by a rise in Procter & Gamble shares. Industrial stocks lagged, weighed down by a decline in Boeing as the plane-maker continued to lose sales to Airbus amid uncertainties over the troubled 737 Max airliner. The transportation segment was generally weak, with UPS, FedEx, and United Airlines shares all recording losses.
•	In moderate volumes, 850 million shares were traded on the NYSE and 2.0 billion shares changed hands on the Nasdaq.

•	European stocks ended the week flat, recouping earlier losses sparked by fears that a U.S.-China trade deal might be delayed until after the U.S. 2020 election.
•	The pan-European STOXX Europe 600 Index ended the week flat, Germany’s exporter-heavy DAX index fell 0.5%, and the UK’s FTSE 100 Index dropped 1.6%. UK stocks tend to decline when the pound rises because many index companies are multinationals with overseas revenues.

•	Chinese stocks advanced, snapping three straight weeks of losses, as investors sensed that an interim U.S.-China trade deal was close at hand. For the week, the benchmark Shanghai Composite Index rose 1.4%, and the large-cap CSI 300 Index, which tracks blue chips listed on the Shanghai and Shenzhen exchanges, added 1.9%.
•	Shares in Brazil, as measured by the Bovespa index, rallied approximately 2.8% for the week. The market was largely unaffected by U.S. President Trump’s threat to reimpose steel tariffs on Brazil (and Argentina) in response to their “massive” currency devaluations, as Brazil’s steel exports to the U.S. represent only about 0.1% of its gross domestic product (GDP).
•	Stocks in Chile, as measured by the IPSA Index, rose about 4.1% for the week. Shares rebounded from early weakness as the Finance Ministry—following the release of data showing that Chile’s economy contracted 3.4% year-over-year in October—announced an economic stimulus package worth about USD $5.5 billion.

Credit

• Credit Levels*
• Yield Curves

•	Treasuries fell following the employment data. The yields on the 2-year note and the 30-year bond rose 2 basis points (bps) to 1.61% and 2.28%, respectively. The yield on the 10-year note is gained 3 bps to 1.84%.
•	Investments in the investment-grade corporate bond market seemed somewhat risk averse early in the week due to the renewed trade tensions and equity market weakness. There were high volume of new deals, and the primary calendar was expected to remain active as dealers make a final issuance push before year-end.

•	Euro zone government bond yields were little changed on Friday, but set for their biggest weekly rise in a month, with investors continuing to take their cue from U.S.-China trade talks.
•	Germany’s 10-year Bund yield, little changed on Friday at -0.29%, is up 6 basis points this week and set for its biggest weekly jump in a month. U.S. and Italian bond yields are also set for their biggest weekly rises in a month.

Currencies & Commodities

• Currencies**
• Commodities

•	The UK pound rose to a seven-month peak against the U.S. dollar and the euro, marking its highest level under Prime Minister Boris Johnson. The pound’s recovery came as opinion polls showed the ruling Conservative Party was maintaining a comfortable lead ahead of the December 12 general election.
•	WTI crude oil added $0.77 to $59.20 per barrel and wholesale gasoline was $0.03 higher to $1.65 per gallon. Elsewhere, a gold spot price was $18.10 lower at $1465.10 per ounce

Economic Calendar

• Week In Review
• Week Ahead