Market Update - January 14, 2020Submitted by Jodi Vleck , Beta Wealth Group on January 13th, 2020
For the week and more ending January 10th, U.S. equities experienced a rather mixed opening to 2020, with consternation around a negative geopolitical element involving the US military action in the Middle-East and subsequent Iraqi retaliation being more than offset by universal optimism around the looming signing of Phase One of the U.S.-China trade agreement. For the last week, Technology and Healthcare sectors were the biggest gainers, while Basic Materials, Energy and Telecom names brought up the rear. On the economic front, a lackluster December jobs report offset stronger-than-expected ISM non-manufacturing/services survey results.
Foreign equities fared similarly to U.S. equities with Emerging Market stocks ending up strong on the back of positive sentiment regarding the US-China trade deal and the recent Chinese Central Bank move to lower bank reserve requirements (a stimulative measure to offset damage caused by trade tensions) while European markets ended up about flat for the week. Of late, International markets have moved higher despite headwinds such as the likely implementation of Brexit as well as turmoil in the Middle East.
U.S. bonds ticked modestly lower, with long-term rates heading higher by a few basis points, with most domestic bond groups including high yield and floating rate bank loans posting comparable performance. Commodities ticked lower on the week led by energy, as the geopolitical strife between the U.S. and Iran seemed headed toward de-escalation. On balance, the response from the Commodities market has been largely muted, compared to prior years where hostile military action would have generally led to a more meaningful knee-jerk response higher for oil prices.