Wall Street has just finished the month of April by hitting record highs (S&P500: +1.2 percent WTD, +3.72 percent MTD as of 26 April ; Nasdaq100: +1.85 percent WTD, +4.06 percent MTD) driven by strong corporate earnings overall, even though business-cycle indicators showed signs of weakness at the beginning of the year. So far 4 companies out of 5 in the S&P500 index have therefore reported Q1 earnings above analyst expectations, the most striking results coming from tech stocks (S&P information technology index up +3.12 percent WTD), and more specifically from Twitter Inc (up +12.4 percent WTD), Qualcomm (+8.4 percent WTD), Facebook (+7.4 percent WTD), and Microsoft (+5.3 percent WTD). However the S&P IT index was not the best performer over the week. Eight of the 11 major S&P sectors were in positive territory, especially healthcare stocks which rebounded (+3.66 percent) after two weeks in the red. By contrast, the S&P energy index dropped 1.3 percent in the wake of lower oil prices (WTI down about 1 percent as President Trump urged the OPEC to raise crude production) and disappointing earnings from oil majors such as Exxon (Q1 profits falling nearly 50 percent from a year ago, hurt by poor results in its refining and chemicals segments). Materials also logged losses (-1.31 percent WTD). The same held true for industrials (-1.03 percent WTD) weighed down by a fall in shares of 3M Corp (-12.4 percent WTD) after the company reported a lower-than-expected quarterly profit, cut its 2019 earnings forecast and said it would lay off 2,000 employees globally.
Unlike the previous week, European and Asian equity markets lagged behing the U.S. (MSCI EMU dropping by -0.2 percent, MSCI All China falling by -2.51 percent on concerns that Beijing could slow the pace of monetary easing after unexpectedly strong first-quarter economic data). Japan’s Nikkei was little changed (+0.26 percent) before the Golden Week holidays (Japanese markets closed from Saturday, April 27 to Monday, May 6).
Government bond markets remained relatively calm (yield decreasing slightly on the U.S. 10-year Treasury at 250bps, vs. -2bps for the comparable German Bund). High yield bonds continued their positive momentum in the U.S. from the beginning of the year gaining 0.2 percent WTD (Bloomberg Barclays US Corporate High Yield TR Index).
Find the full report here: https://www.trackinsight.com/weekly-flow-report/2019-04-26/global
