For the market week ended Friday, November 30, 2018
- US equity markets bounced back sharply last week, as Fed Chairman Powell suggested that the Fed may not raise rates as much in 2019, and hopes for progress between the US and China at the weekend’s G-20 Summit increased. The S&P 500 rose 4.9% for the week, regaining positive returns for the year at 3.2%. The Nasdaq rallied 5.6% for the week, bringing year-to-date returns up to 6.2%, while the Russell 2000 (small-cap stocks) increased 3.0% for the week to bring its drop for the year up to -0.2%.
- Global markets increased slightly last week thanks to the trade hopes, though political concerns in Europe related to Brexit and lukewarm economic data out of Asia weighed on returns. Developed markets only increased 1.0% for the week with Europe slightly outperforming Asian markets. For the year, Developed Markets have dropped 11.7%. Emerging Markets performed much better given the prospect of improved trade, up 2.6% for the week. For the year, Emerging Markets have still fallen 14.1%.
- Fed Chairman Jerome Powell softened his stance on interest rate increases last week, noting that rates are currently “slightly below” what the Fed would consider a neutral level. The Street interpreted his statement as the Fed will indeed raise rates again in December by another 0.25%, but will be much more data-dependent on any rate increases in 2019. As a result, interest rates have declined recently, with the yield on the US 10-Year Treasury dipping to 2.99% from roughly 3.25% a mere three weeks ago.
Of Interest to Us...
- The G-20 Summit, a gathering of the 20 leading economic countries in the world, met this past weekend in Argentina, and initial reports suggest that the US has agreed to delay for now the increase in tariffs on Chinese goods from 10% to 25% which had previously been set to go into effect on January 1st. The US has also agreed to wait on imposing new tariffs on additional Chinese goods. It is unclear what the US is receiving for these concessions, though it appears that trade negotiations between the US and China will take place over the next 90 days. The Street will likely view these reports, if correct, as a positive step in easing trade tensions.