For the market week ended Friday, September 28, 2018
- US equity markets paused last week, though the just-completed third quarter showed strong gains. Trade remains the near-term driver of the markets, as last week’s declines came due to China cancelling mid-level trade talks with the US in response to recent tariffs, while the US and Canada failed to reach a trade agreement by their self-imposed September 28th deadline. The S&P 500 dropped 0.5% for the week, though gains for Q3 were up 7.2% and year-to-date gains sit at 9.0%. The Nasdaq actually increased 0.7% for the week and remains the best-performing major index for the year, up 16.6%. The Russell 2000 (small-cap stocks) fell 1.1% for the week and is now up 10.5% for the year.
- Fresh concerns about Italian debt levels combined with the trade news to hit global markets last week. Developed markets fell 1.1% for the week, with the concerns out of Italy causing European stocks to drop over 2.3%. For the year, Developed Markets have declined 3.8%. Emerging Markets decreased 0.3% for the week, helped by Chinese equities bouncing back from their notable decline the prior week. For the year, Emerging Markets have fallen 9.5%.
- Oil prices rose sharply last week, up 4.0%, as supply concerns gripped the market amid OPEC failing to agree to production increases over the weekend. Global demand for energy remains healthy thanks to a relatively strong global economy. Oil prices have increased 22.4% for the year and now sit at roughly 4-year highs.
Of Interest to Us...
- Oil prices are up over 22% for the year, yet Energy stocks are up less than 5.0%. Is the lack of performance of Energy stocks a sign that the market thinks the rise in oil prices this year is not sustainable, or are Energy stocks poised to rally by yearend?