LSA Connect

Economic Update 1-02-2018

• With an extremely light holiday calendar for economic data, highlights included stronger housing and regional purchasing data and weaker consumer confidence and jobless claims.
• U.S. stock markets fell during the last week of the year, while international equities gained with the help of a weaker dollar.  Bonds fared well as interest rates declined for the week, and foreign bond markets also benefited from the dollar’s move.  Commodities across the board experienced a positive week.

U.S. stocks experienced a low-volatility last week of the year, resulting in a net decline in prices.  From a sector standpoint, utilities and industrials gained the most ground, while tech stocks pulled back by a percent, affected a bit by demand concerns for Apple’s new iPhone.

The dollar fell back by a percent, which acted as a strong tailwind for both developed and emerging market equities.  U.K. stocks were especially strong with positive online shopping results, while European and Japanese stocks actually lost ground for the week in local terms; however, the currency translation on the latter two regions turned the negative into a positive result for U.S. investors.  Emerging market outperformance was highlighted by gains in non-China Asian regions, such as Korea, Malaysia and Indonesia, although most nations benefitted from the weaker dollar to some degree and stronger commodity prices.  Chinese growth looks to be slowing again as we enter the new year, which always seems to result in a mixed bag for markets.  On one hand, as the global growth engine of recent years, a slowing economy equates to likely slower world GDP growth; at the same time, a more tempered pace of growth has spurred the government to work on reducing internal leverage and high debt levels, perhaps lowering the chances of a crisis. Continue reading →