RECAP: For the week ending March 31st 2017

April 2, 2017

Stocks rose for the week and closed out the first quarter of 2017 with healthy gains. Energy stocks performed well at midweek as domestic oil prices climbed back above $50 per barrel on news of a smaller-than-expected increase in inventories. Energy stocks remained the worst performer in the postelection rally, however, staying roughly flat as the overall market climbed over 10% since election day. Instead, investors appeared to turn their hopes to President Trump’s tax reform efforts, even if they expected rate cuts and other changes to be watered down a bit and arrive later than originally anticipated. High yield trading activity picked up after a sluggish start to the week. Exchange-traded funds saw strong inflows and were the most active buyers. The health care sector performed well overall after the bill to replace the Affordable Care Act was abandoned. Energy credits retraced a portion of recent losses upon news that last week’s increase in U.S. crude oil reserves was less than expected.

Higher metals prices helped Europe’s basic resources stocks log a strong gain on Thursday, and oil and gas shares also benefited from a jump in crude oil prices after Kuwait supported an extension in OPEC production cuts. Government bonds across the eurozone rallied during the week. The yield on 10-year German bunds decreased to around 0.33% as of Thursday, the lowest level since the first week of the month. (Bond prices and yields move in opposite directions.) French 10-year bond yields declined to around 0.94%, a three-week low. UK government bonds also gained, rallying strongly during the second half of the week after Prime Minister Theresa May invoked the Article 50 clause that begins the two-year process for the UK’s exit from the EU. The yield on 10-year gilts decreased to around 1.12% as of Thursday, a one-month low.

The large-cap Japanese stock market benchmarks declined for the week and brought year-to-date returns into negative territory. The widely watched Nikkei 225 Stock Average closed the week at 18,909.26, losing 1.83%

China’s manufacturing purchasing managers’ index (PMI) rose to a better-than-expected 51.8 in March, while the nonmanufacturing PMI climbed to its highest level in nearly three years, the country’s statistics bureau reported last week. March marks the eighth straight month China’s official manufacturing PMI has exceeded 50, a level separating expansion from contraction.

The South African rand tumbled against the dollar after South Africa’s President Jacob Zuma fired Finance Minister Pravin Gordhan after ordering him to cancel an investor roadshow. The move was perceived as negative by market watchers. Venezuela’s Supreme Court, which is controlled by President Nicolás Maduro’s socialist government, ruled that it was taking over the opposition-dominated National Assembly. The Organization

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