Market Update - March 4, 2019Submitted by Jodi Vleck , Beta Wealth Group on March 6th, 2019
For the week ended March 1, 2019, U.S. stocks closed higher as optimism over a trade deal with China and the announcement of an extension of the March 1 deadline indicate negotiations are progressing. The S&P index is once again back to levels last seen in early October 2018, which marked the beginning of the last bear market. Energy led the week, despite the drop in oil prices. Technology and financials also contributed to the positive week, while materials were a detractor.
U.S. economic data for the week was mixed. After a long wait, the shutdown-delayed 4Q GDP was reported last week. It showed the U.S. economy grew 2.6%, which beat expectations but signaled a slowdown from the previous quarter. Meanwhile, manufacturing (ISM) and jobless claims were slightly weaker.
On the interest rate front, U.S. bonds lost some ground as interest rates increased. Commodities fell, led by declines in multiple segments, including the price of crude oil by several percent. While natural gas prices increased 4%, this was offset by the price of crude oil falling by -3% to $56/barrel. Some attribute the drop in crude to the President commenting his displeasure with oil prices as ‘too high.’
Chinese stocks posted a solid week as the U.S. delayed the Mar. 1 tariff implementation as mentioned above. Additionally, MSCI announced it would sharply increase weightings of Chinese equities in its benchmarks in 2019. The is a result of the recognition of the increasing proportional market cap of the nation’s equities in relation to the rest of the world. Indexers who benchmark to the MSCI will have to increase their weightings to the index accordingly, which could serve as a nice boost to the Chinese market.