Weekly Market Recap


Global stocks ended lower on sparse news. Politics remained top of mind for investors, with recent polls moving in favor of Mrs. Clinton. Regardless of the election outcome, political uncertainty should abate as November draws near and gridlock will likely persist—an underappreciated positive for stocks as the bull market continues to grind higher. Big US banks reported earnings, with results showing strong capital markets activity, offset by relatively weaker traditional banking. European data was sparse but positive—German exports and imports bested expectations in August, growing 5.4% y/y and 3% y/y, respectively. September Chinese trade data disappointed, with exports contracting 10% y/y. However, we caution against reading too much into a single month, as August was a positive surprise. The Q3 earnings season picks up steam, with many bellwether firms releasing results. In the US, the final presidential debate will be held. US economic releases include inflation, home construction, and industrial production figures. In Europe, the ECB meets to set monetary policy and  the UK releases inflation data. China will report Q3 GDP.


Global equities ended slightly lower. Long-term interest rates rose, leading to weakness in defensive, interest-rate sensitive equity categories. US economic data were mixed. The September ISM manufacturing Purchasing Managers’ Index (PMI) hit 51.5 and the non-manufacturing PMI jumped to 57.1 (readings over 50 indicate expansion), both beating estimates. Eurozone economic data broadly improved. August retail sales rose 0.6% y/y, slower than expected. German August manufacturing orders (+2.1% y/y) and industrial production (+1.9% y/y) beat forecasts. France’s August industrial production also beat expectations. UK data were mixed—August industrial production grew 0.7% y/y, falling short of forecasts and September home prices edged up 0.1% m/m. In Japan, the September services PMI contracted to 48.2, while the September consumer confidence index beat expectations with a jump to 43. In the week ahead, the second US presidential debate is held on Sunday at Washington University in St. Louis. The Fed releases minutes from September’s meeting. The US and UK provide September retail sales, while Japan releases August retail sales. China trade, money supply, bank lending and inflation data are due. Germany posts data for August trade and September inflation. 


Global equities ended a volatile week slightly lower as positive economic data and optimism over OPEC production cuts were offset by European bank concerns and tensions between India and Pakistan. US economic were generally positive, with September Chicago purchasing managers’ index (PMI) increasing along with core personal consumption expenditures and the July Case-Shiller home price index.  The final revision of Q2 GDP also exceeded expectations.  The Eurozone continued its underappreciated recovery and UK Q2 GDP was revised above consensus, marking a fourteenth consecutive quarter of growth. Italian Prime Minister Matteo Renzi’s government scheduled a constitutional referendum on December 4. If approved, the reforms could allow for the easier passage of new legislation. Chinese data were positive, assuaging concerns of a slowdown in the world’s second largest economy, while Japanese data were mixed. In the week ahead, the US vice presidential debate will take place, the UK and Eurozone will report September manufacturing and services data, and China will report September foreign reserves, manufacturing and services data.