Markets & Key Events | 18th April 2019

Though the US and most European markets are shut tomorrow for Good Friday, it was still a busy week of economic data releases for major economies including the Eurozone and China. Meanwhile investors have also been closely following the first quarterly earnings reports, as markets make sense of the corporate picture.

Global stock markets performance has been broadly positive so far, however as of Thursday 9 am London time, in US, the S&P 500 is marginally down 0.24% after mixed company earnings results. Goldman Sachs missed revenue estimates to send its shares sharply lower whilst Citigroup, which hit its estimates, edged slightly lower. Other financials including BlackRock and Bank of America posted better results, whilst food and snacks company PepsiCo beat forecasts with its biggest sales increase in more than 3 years. Elsewhere as of Thursday 9am London time, the UK FTSE all share is up 0.2%, and the Eurostoxx 600 is also higher by 0.56%. Markets in Asia have also been positive thus far with the Japanese Topix up 0.60% and the Shanghai Composite (China) posting a gain of 1.93%.

Asia Pacific

The main focus this week was on GDP data from China. Despite questions over the state of the global economy, better than expected data batted away concerns for now that China is faltering as GDP expanded 6.4% year on year in the first quarter, against expectations of 6.3%. This comes at a time where the Government has begun efforts to bolster economic activity; the government last month unveiled a 2 trillion Renminbi ($298bn) tax-cut package. Yesterday’s Chinese industrial production and retail sales also came in better than expected, helping drive modest gains across Asian stock markets.

Meanwhile in Japan, a flash Purchasing Manager Index (PMI) survey showed manufacturing activity contracted at a slightly slower pace in April, but new export orders fell at the fastest pace in almost three years in a sign that global trade remains under pressure.

Europe and the United Kingdom (UK)

The mood was more cautious in Europe however. Closely watched manufacturing PMIs for eurozone just missed forecasts and pointed to further contraction. For the bloc in aggregate, the index did rise from 47.5 to 47.8, however the reading is still below 50, indicating an overall contraction in economic activity. The data was mostly driven by French and German industrial sectors that also contracted. On the news of the surveys, the euro fell to its lowest level of the session, down 0.5 per cent to $1.1244.

Despite wider concerns about the future of the UK economy after Brexit, employment remains robust.  The UK’s unemployment rate remains steady at 3.9%, whilst growth in employment for the three months prior to February has been boosted by higher participation from women and the over 50’s.

Retail sales also unexpectedly jumped in March, much to the surprise of many economists. Consumers seem unphased by the Brexit uncertainty as sales volumes rose 1.1% in March, ahead of the expected 0.3% rise.

Fixed Income

Immediately after the release of disappointing Eurozone data late this morning, investors cautiously sought safe haven government debt, pushing bond yields lower (yields move inversely to their price). In particular, the German 10-year Bund yield fell to 0.039%. Gilt and Treasuries yields were more stagnant over the week. Up until Thursday 9am, the 10-year Gilt yield moved just 1 basis point to 1.217%, whilst the 10-year US Treasury yield is down 1 basis point to 2.56%

Commodities

Oil prices eased marginally over the period, after last week’s strong gains. Brent crude oil is trading down 0.49% to $71.2 as of this morning. Elsewhere, gold prices continued to weaken this week, falling 1% on Tuesday alone. This comes amid optimism over US-China trade talks and rising equity markets year to date. The precious metal is trading at $1,276 per ounce.


The information provided above is for Professional Advisers: All data has been sourced from Lipper. Any investment must be made in conjunction with reading the relevant KIID or Investment Mandate. Clients should be aware that the value of investments and the income from the may fall as well as rise and they may not get back the amount originally invested. Investors should note that the views expressed and information given were current at the time of publication but may no longer be so and/or may have been acted upon by the Investment Manager already. Source SmartIM