GLOBAL MARKET SNAPSHOT
Equity markets saw mixed performance on Wednesday. Asian markets were the outperformers as they caught up overnight to the strength seen yesterday in Europe and the Americas. Emerging markets outperformed developed markets broadly with as attention shifts to the monetary ammunition being deployed there. In the U.S., sector performance was similarly mixed with consumer +0.4% and materials +0.3% outpacing technology -0.7% and energy -1.4%. In afterhours trading, shares of Netflix have jumped 9% following an earnings beat.
Treasury yields moved lower and the curve steepened further as weaker than expected retail sales data gave the Fed further ammunition for a rate cut at its meeting at the end of the month.
The U.S. dollar index declined -0.3% on fairly uniform weakness against G10 crosses. Reflecting the weakness of the energy sector, Norwegian krone and Canadian dollar were the laggards. It was a rather benign day for British pound despite the Brexit clock continuing to tick down, inflation data on the docket, and Mark Carney speaking twice.
The Bloomberg Commodity Index dipped -0.1%.
Retail sales data in the U.S. weighed on sentiment as investors fear that indications of recession emanating from the manufacturing sector maybe making its way into consumer behavior. Sales declined -0.3% in September from a month prior bringing the annual pace of growth to 4.1%, down from 4.4% last month. Expectations were for a monthly increase of 0.3%.
The Fed’s Beige Book, its periodic report on current conditions in each of the Fed’s 12 districts, indicated that the economy has slowed slightly since its last issue this summer. According to the report, “Business contacts mostly expect the economic expansion to continue; however, many lowered their outlooks for growth in the coming 6 to 12 months.” Relative weakness is being seen across the middle of the U.S., while southern and western regions experience a stronger expansion.
Inflation data out of Europe came in a hint below expectations. Headline consumer inflation in the Eurozone and U.K. increased 0.8% and 1.7% year-over-year, respectively, each 0.1 percentage points below expectations. Core inflation in the Eurozone was modestly stronger at 1.0%, which was in line with expectations.
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