RECAP: for the week ending September 9t

September 12, 2016

On Thursday the Standard & Poor’s 500 Index had gone 40 days without a swing of over 1.5%, the longest such stretch on record, followed by a sharp sell off on Friday caused stocks to suffer their largest weekly decline of the year. Hopes that the Federal Reserve would stay its hand and not raise interest rates at its upcoming meeting on September 21 appeared to help drive modest gains early in the week. Optimism surrounding lower rates appeared to take several hits at the end of the week: First, U.S. investors seemed disappointed that the ECB did not choose to ease monetary policy on Thursday. Second, investors appeared to react negatively to a speech by Boston Fed President Eric Rosengren  who mentioned that there is “a reasonable case” for higher interest rates. Investor confidence was also shaken further on Friday morning when North Korea announced what is expected to be their largest nuclear test yet.
In Europe, there was no new stimulus as the ECB kept interest rates and its current stimulus program unchanged at their September meeting. Yields on 10-year German government bonds hit their lowest level in more than a month earlier in the week but rose following the ECB’s announcement. Germany also said that its exports plunged 10% in July compared with the year-ago period. It was the sharpest decline since 2009, as the industrial sector struggles with lower sales in China, the U.S., and the UK. France, Europe’s second-largest economy, also reported that its industrial production declined in July by 0.6% compared with June, despite earlier analysts’ expectations of strengthening.

DeGroote on Facebook DeGroote on Twitter WMA LinkedIn