top of page
  • J. J. Wenrich CFP®

Weekly Market Performance – Markets Grind Higher Amid Mixed Debt Ceiling News

Markets Blog

Index Performance


U.S. and International Equities


Markets Higher

U.S. stocks ended the week higher as growth sectors led the advance. Year-to-date, growth have outperformed as some investors believe the slowing economy will cause the Federal Reserve to pivot. In addition, positive advancements surrounding artificial intelligence has helped these sectors advance, even as some investors question elevated valuations.


The markets had been struggling for direction, before this week’s 1.6% increase. The S&P 500 Index had not experienced a weekly move of 1% higher or lower during the last six weeks, the longest such streak since 2019. The latest Bank of America global fund manager survey shows that allocations to bonds are at a 14-year high, with cash levels up to 5.6% amid persistent recession concerns.


The German blue chip DAX index is near an all-time high as inflation conditions, while high, are improving. In addition, Japan’s TOPIX Index reached a new 33-year high this week. LPL Research believes that the Japanese equity market has become more attractive recently, both on its own merit and as a relative play in a slow global growth environment. The TOPIX has returned 13% year to date in yen and 9% in U.S. dollars, both ahead of the 8% gain for the S&P 500.


Fixed Income Mixed

The Bloomberg Aggregate Bond Index finished lower as bond prices declined while yields increased. High-yield corporate bonds, as tracked by the Bloomberg High Yield index, ended the week lower.


The Treasury released its monthly TIC data on foreign transactions and holdings of U.S. securities for March, showing foreign investors purchased $35.6 billion long-term Treasuries over the month. Regionally, net buying was concentrated in the Euro-area and emerging markets, with the largest outflows emanating from China and Japan.


Commodities Mixed

Energy prices finished higher this week as global economic sentiment has improved. Natural gas prices have finished higher for the second consecutive week. The major metals, gold, silver, and copper, ended the week lower. The World Gold Council reported this month that global central bank purchases of gold hit a record high in the first quarter of this year, after record annual highs in 2022 amid the present inflation landscape and concerns over a U.S. debt default.


Economic Weekly Roundup


Japan GDP

The Japanese economy grew through the first quarter, reversing decreases seen from the last three quarters. Private consumption, which accounts for more than half the economy, drove this increase with its own gain of 0.6%. This rise in private consumption can be attributed to a boost in consumer spending following the rollback of COVID-19 restrictions.


German Sentiment

May’s ZEW Indicator of Economic Sentiment, which serves as a leading indicator for the German economy, turned negative for the first time in five months as up to 300 experts from financial institutions and select corporations predict tougher times ahead. This negative outlook is the result of investors perceiving a rise in threats to Europe’s largest economy, the largest of these being the possibility of both the U.S. defaulting and the European Central Bank (ECB) raising interest rates further.


UK GDP

United Kingdom’s GDP grew by 0.1% in the first quarter of 2023. This growth was supported heavily by manufacturing and productive industries, which rose by 0.1%, reversing five consecutive quarters of decline and a sixth of no growth. Furthermore, construction output rose by 0.7%, increasing for a sixth straight quarter. However, inflation that has recently reached 10.1% in March threatens to undermine the progress towards reaching post-pandemic economic activity.


China April Industrial Production and Retail Sales Wane

Chinese industrial production for April increased by 5.6% year-over-year and retail sales rose by 18.4% during the same period, which although positive, shows there may still be obstacles to China’s post-pandemic recovery. These figures, paired with a decline in monthly imports, appear to show that the demand from Chinese consumers could be starting to fade earlier than expected.


Weekly Unemployment

Initial and continuing claims for the latest week came in below economists’ expectations and the prior week’s report. The labor market is expected to further loosen during the second quarter as companies respond to slowing demand triggered, in part, by the Fed’s tighter monetary policy.


Week Ahead

In addition to a busy week of earnings reports from corporate America, the following economic data is slated for the week ahead:

  • Tuesday: Building Permits (Apr), PMI Composite (May), S&P Global PMI Manufacturing and Service (May), new home sales (Apr),

  • Wednesday: FOMC Minutes

  • Thursday: Weekly initial and continuing unemployment claims, GDP (Q1), pending home sales (Apr)

  • Friday: Durable orders (Apr), core PCE deflator (Apr), PCE deflator (Apr), Personal Consumption Expenditures (Apr), Personal Income (Apr), wholesale inventories

IMPORTANT DISCLOSURES

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.


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. For more information on the risks associated with the strategies and product types discussed please visit https://lplresearch.com/Risks


References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.


Investing involves risk including the loss of principal. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.


Bond yields are subject to change. Certain call or special redemption features may exist with could impact yield. High yield/junk bonds (grade BB or below) are not investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.


The fast price swings in commodities will result in significant volatility in an investor’s holdings. Commodities include increased risks, such as political, economic, and currency instability, and may not be suitable for all investors.


Unless otherwise stated LPL Financial and the third party persons and firms mentioned are not affiliates of each other and make no representation with respect to each other. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.


All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.


Securities and advisory services offered through LPL Financial, a registered investment advisor and broker-dealer. Member FINRA/SIPC.


For Public Use Tracking 1-05370332


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


For a complete list of descriptions of the indexes and economic terms referenced in this publication, please visit our website at lplresearch.com/definitions

Comentários


Os comentários foram desativados.
bottom of page