Market Update - June 14, 2019Submitted by Jodi Vleck , Beta Wealth Group on June 18th, 2019
U.S. stocks ticked just a bit higher on the week, with less volatility than over recent weeks. Over the prior weekend, an agreement between the U.S. and Mexico regarding immigration policy resulted in a pullback on the previously-announced threat of tariffs, boosting market sentiment early in the week, with one of the potential trade hurdles removed. Several announced mergers, such as United Technology’s proposed acquisition of Raytheon, also seemed to boost market sentiment. By sector, consumer discretionary stocks led with gains over 2%, followed by communications and utilities, while energy and industrials lagged with losses approaching a half-percent.
Foreign stocks ended the week similarly to those in the U.S., although a percent gain in the value of the U.S. dollar (mostly versus the euro and pound) pushed net returns into the negative. Returns in the Eurozone, U.K. and Japan were all in fairly close alignment, while emerging markets fared much better, with gains in Russia, China and Mexico, which offset a weaker Brazil and India. Gains in the Far East appeared to be driven by hopes for further Chinese government stimulus.
U.S. bonds experienced minimal change for the week, although investment-grade corporates and high yield outperformed treasuries to a small degree. Overseas, a stronger dollar punished net returns for developed market debt (which carries a minimal coupon in many countries to offset currency price declines), while emerging market bonds were mixed as local currency debt interestingly outperformed USD-denominated.
Commodities broadly were flat on the week, with strength in agricultural commodities wheat, corn and soybeans (helped by terrible flooding across swaths of the U.S. that has delayed or prohibited crop planting) offset by lower pricing for petroleum. The price of crude oil declined by a few percent to nearly $52.50/barrel, to remain within its recent range. Despite the bombing of several tankers in the Persian Gulf, attributed to the Iranian Republican Guard, that again increased regional tensions, a report by the International Energy Agency of far lower global growth in oil demand, as well as continued reports of large U.S. stock piles, outweighed in terms of sentiment.