Market Update - December 9, 2019Submitted by Jodi Vleck , Beta Wealth Group on December 9th, 2019
For the week ended December 6th, US equities were mixed to slightly positive with President Trump's comments that a China trade deal might not be struck until next year or even after the election, being offset by more optimistic commentary about the state of ongoing trade talks and a better-than-expected employment report on Friday. From a sector standpoint, energy and consumer staples sectors led the way with modest gains, while industrials and consumer discretionary sectors lagged. Also, positive news about the magnitude of Black Friday/Cyber Monday sales pointed to continued strength in the consumer, which offset rumors about tariffs being imposed on steel/aluminum imports from Brazil & Argentina. On the economic front, a strong jobs number for November was offset by weaker ISM Manufacturing and Services index readings.
Foreign equities were held back by economic pessimism and the lack of progress in trade conversations with China, but a weaker dollar somewhat offset such losses for domestic US investors. Emerging markets fared well partly on the back of what appears to be a bottoming of sentiment in key developed markets and stronger-than-expected commodity prices.
U.S. bond prices declined as the yield curve steepened, which is consistent with improving sentiment for risk assets and the Federal Reserve's assertion that they are done raising rates in the short-term. US Corporate credit performed relatively well with high yield credit and bank loans earning positive returns, Foreign developed market bonds performed similarly to domestic debt in local currency terms and Emerging markets fared better due to hopes that U.S.-China trade deal talks were making substantive headway.
Lastly, Real Estate declined slightly on the back of slightly higher rates in the U.S while the weaker dollar helped European REITs gain some ground. In addition, Commodities posted meaningful gains last week with the price of crude oil rising by a dramatic 7% last week to $59/barrel, based upon news of OPEC production cuts production in January.