Weekly Market Update – February 11, 2019

Last Week

  • Global equities decline after six positive weeks. Global equities experienced their first weekly decline in 2019 driven primarily by declines in non-U.S. regions. U.S. equities were mostly unchanged (0.2%), while non-U.S. developed market (-1.4%) and emerging market equities (-1.2%) both declined.
  • Trade tensions remain a growth headwind. Financial markets remain somewhat apprehensive about U.S.-China trade relations.  Without a deal, U.S. tariffs on $200 billion of Chinese goods will increase from 10% to 25%.
  • Bank of England cuts growth forecasts amid Brexit uncertainty. Last Thursday’s meeting added the Bank of England (BOE) to the list of central banks recently taking a more dovish tone. BOE leader Mark Carney signaled that the main policy rate, currently 0.75%, would remain on hold until economic concerns were removed. Officials forecast a 25% chance of recession in the next six months even if Brexit concludes smoothly.
  • BB&T makes deal to buy SunTrust. In an all-stock deal, BB&T (BBT) plans to purchase SunTrust Banks (STI) in what would be the largest U.S. bank merger since the financial crisis. The new $66 billion financial institution would be the sixth-largest U.S. retail bank.

This Week

  • Consumer discretionary companies make up bulk of remaining reports. The first half of fourth quarter 2018 earnings season is complete, leaving the majority of companies left to report coming out of the consumer discretionary sector.  The sector has grown earnings by 12.8% and has been consistently above consensus expectations. Other companies capturing investors’ attention this week include Deere & Co. (DE), Coca-Cola Co. (KO) and Du Pont (DD).
  • China trade data expected to remain weak. China import and export data will be released this week with expectations for a year-over-year decline in both measures.
  • UK Parliament may vote on alternative Brexit deal. UK Prime Minister Theresa May is set to return to Parliament on Thursday following negotiations on Brexit terms with European Commission President Jean-Claude Juncker.  If Parliament doesn’t agree to their terms, May will be forced to modify her plans to put them up for another vote.

 

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