Weekly Market Commentary


A weekly roundup of the latest developments in financial markets and global economies.

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15 July 2019

Key Highlights

Expectations for monetary easing around the world continue to drive stocks higher.
As the second-quarter earnings season kicks off next week and attention shifts from central banks to earnings, investors think volatility will likely pick up and increase uncertainty.

Equities

Developed Markets
Key Indices 12-Jul-2019 1w 3m YTD 1y
S&P500 3,014 0.8% 3.7% 20.2% 7.7%
DJIA30 27,332 1.5% 3.5% 17.2% 9.7%
EuroSTOXX 3,498 (0.9%) 1.4% 16.5% 1.5%
DAX 12,323 (2.0%) 2.7% 16.7% (1.4%)
FTSE 7,506 (0.6%) 0.9% 11.6% (1.9%)
Emerging Markets
Key Indices 12-Jul-2019 1w 3m YTD 1y
Brazil 103,906 (0.2%) 11.9% 18.2% 37.0%
Russia 1,570 (0.4%) (0.9%) 16.4% (7.1%)
India 11,553 (2.2%) (0.8%) 6.4% 4.8%
China 2,931 (2.7%) (8.1%) 17.5% 3.3%
South Africa 57,277 (0.5%) (1.9%) 8.6% 0.8%
United States
U.S. equities finished in the green, notching additional weekly gains and record highs, with continued rate cut expectations fuelling the rally courtesy of the Congressional monetary policy testimony by Fed Chairman Jerome Powell, which was further aided by tame inflation numbers.
The technology-heavy Nasdaq Composite Index also performed well and ended the week as the best year-to-date performer, up nearly 24%, while the smaller-cap indexes recorded modest losses for the week. Technology shares were among the best performers in the S&P 500, bolstered by gains in chipmakers. Health care stocks were particularly volatile on Thursday after the White House abandoned plans to stop the Medicare and Medicaid programs from providing rebates to pharmacy benefit managers, which act as middlemen between insurance plans and pharmaceutical firms.
U.S.-based money-market funds attracted about $28 billion in the week ended Wednesday, their largest weekly inflow since mid-May, as the S&P 500 Index rose above 3,000 for the first time on Wednesday. It was money funds' third consecutive week of cash inflows, with a four-week moving average of $18.8 billion.
The UK & European Union
Stock markets in Europe fell despite fresh signs that the Fed and the European Central Bank (ECB) are considering further stimulus measures.
The pan-European STOXX Europe 600, the UK’s FTSE 100 Index, the exporter-heavy German DAX index, and France’s CAC 40 Index fell as trade tensions erupted between the U.S. and France and amid more signs of economic weakness across the region.
Emerging Markets
Stocks in China recorded a weekly loss, as investors digested trade data underscoring the U.S. trade rift’s negative impact on China’s economy and pocketed gains from the prior week’s rally. The benchmark Shanghai Composite Index fell 2.67%, and the large-cap CSI 300 Index, which tracks blue chips listed on the Shanghai and Shenzhen exchanges, shed 2.16%.
Stocks in Mexico, as measured by the IPC Index, declined about 1.8%. Mexican assets, including the peso, were pressured by the unexpected resignation of market-friendly Finance Minister Carlos Urzua on Tuesday.
Turkish stocks, as measured by the BIST 100 Index, returned about -2.5%. The market started the week on a negative note, following news that President Recep Tayyip Erdogan fired Murat Cetinkaya, the head of the central bank, on Saturday, July 6.

Credit

Credit Levels*
Key Indices 12-Jul-2019 1w 3m YTD 1y
iTraxx Mains 49 50 57 87 67
iTraxx Fin Snr 59 61 68 109 79
iTraxx X-Over 246 245 244 353 298
CDX IG 53 53 56 88 62
CDX HY 325 321 350 449 320
Yield Curves
Key Indices 12-Jul-2019 1w 3m YTD 1y
2-yr US Treasury 1.85 1.86 2.39 2.49 2.59
10-yr US Treasury 2.12 2.03 2.57 2.68 2.85
30-yr US Treasury 2.65 2.54 2.98 3.01 2.95
10-yr German Bund -0.21 -0.36 0.06 0.24 0.36
10-yr UK Gilt 0.84 0.74 1.21 1.28 1.28

* On the Run Levels (bps)

United States Credit
Treasuries were flat, as the yields on the 2-year and 10-year notes, along with the 30-year bond, were unchanged at 1.85%, 2.12% and 2.64%, respectively.
The high yield market followed equities lower as the week began but the market partly retraced earlier losses after Fed Chairman Powell’s dovish comments about a potential rate cut. Below investment-grade funds reported positive flows. The relatively busy issuance calendar was met with muni fund inflows that exceeded $1 billion for the third consecutive week. Unexpectedly high issuance in the investment-grade corporate bond market was also met with strong demand.
European Credit
Safe-haven German government bonds were set for their biggest weekly selloff in nearly 1.5 years on Friday as signs of economic strength in Europe and the United States suggested fears of a downturn may be overdone.
French 10-year government bond yields were up 3 bps at 0.05%, set for its biggest weekly rise in over two years, up 13 bps.

Currencies & Commodities

Currencies**
Key Indices 12-Jul-2019 1w 3m YTD 1y
EUR 1.13 1.12 1.13 1.15 1.17
GBP 1.26 1.25 1.31 1.28 1.32
AUD 0.70 0.70 0.72 0.70 0.74
YEN 107.91 108.47 112.02 109.69 112.55
Commodities
Key Indices 12-Jul-2019 1w 3m YTD 1y
Crude (Brent) 67.2 4.3% (5.3%) 26.5% (8.8%)
Crude (WTI) 60.2 5.0% (5.8%) 32.6% (14.4%)
Gold 1,416 1.2% 9.7% 10.4% 13.5%
Silver 15.2 1.5% 1.6% (1.8%) (4.6%)

** w.r.t. USD

Currencies and Commodities
The euro saw slight change versus the U.S. dollar and the British pound was higher. The Dollar Index-a comparison of the U.S. dollar to six major world currencies-lost 0.2% to 96.83.
Energy shares performed well on the back of declining U.S. oil inventories that supported crude oil prices. However, gains were capped following reports from the EIA this morning which forecasted a global oil surplus in the next nine months.

Economic Calendar

Week In Review
Economic Indicator Release Date Actual Consensus
US Initial Jobless Claims 11-Jul-2019 209k 221k
US CPI MoM 11-Jul-2019 0.00% 0.00%
Week In Ahead
Economic Indicator Release Date Consensus Prior
US Industrial Production MoM 16-Jul-2019 0.10% 0.40%
UK CPI YoY 17-Jul-2019 2.00% 2.00%
US Initial Jobless Claims 18-Jul-2019 216k 209k

Disclaimer

This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice. This material is not financial research and was not prepared in compliance with applicable provisions of law designed to promote the independence of financial analysis. Investors are urged to consult with their financial advisors before buying or selling any securities. This information may not be current and Oxane Partners has no obligation to provide any updates.

This material is provided for educational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell securities. The information contained in this presentation is not intended to be used as a general guide to investing, or as a source of any specific investment recommendation.Views and opinions expressed are for informational purposes only and do not constitute a recommendation by Oxane Partners to buy, sell, or hold any security. Views and opinions are current as of the date of this presentation and may be subject to change, they should not be construed as investment advice. Sources used for preparing the report: Bloomberg; Wall Street Journal, Financial Times, Thomson Reuters