Global Equity Markets End the Summer on a High Note09-04-2018 |
Sources: Sources for data in tables: Equity Market and Fixed Income returns are from JP Morgan as of 08/31/18. Rates and Economic Calendar Data from Bloomberg as of 09/03/18. International developed markets measured by the MSCI EAFE Index, emerging markets measured by the MSCI EM Index. Sector performance is measured using GICS methodology.
Global equity markets finished the week, and the summer, on a high note as equity markets in aggregate continued to exhibit impressive performance. In the U.S., the S&P 500 Index pushed ahead to a level of 2902, representing a gain of 0.98%, while the Russell Midcap Index gained 0.64% for the week. The Russell 2000 Index, a measure of the Nation’s smallest publicly traded firms, followed the lead of its larger counterparts, returning 0.91%. On the international equities front, developed markets and emerging markets edged higher by 0.28% and 0.60% respectively. Finally, the 10 year U.S. Treasury yield fluctuated around a level of 2.86%, while the U.S. Dollar was relatively stagnant, returning a meager 0.02%.
The final week of the summer proved to be characteristically uneventful, apart from the release of 2nd quarter GDP revisions, which reaffirmed our conviction in the strength of the U.S. economy. The updated GDP figures indicate an annualized U.S. GDP reading of 4.2% for the second quarter, representing a slight increase from the previously reported rate of 4.1%. Moreover, the largest and most important component of GDP – consumer spending – did not disappoint, as data pointed to an annualized growth rate of 3.8%.
Looking ahead, investors will be intently focused on Brett Kavanaugh’s Supreme Court confirmation hearings this week as well as any reports on trade negotiation talks with the likes of Canada and China. It is also important to remember that the Federal Reserve is scheduled to meet again this month on September 25 – 26, where there is a 96% likelihood of another interest rate hike of 25 basis points (i.e. 0.25%) according to MarketWatch.
As the summer months have now come to a close, we would not be surprised to see a pickup in trading volume and overall volatility given the many uncertainties that are present across the world. During such times, portfolio diversification can be helpful. As a result, we encourage investors to revisit the diversification that may, or may not, be in place within their existing portfolios. If you would like to learn more about how we are helping clients invest dynamically and consistently with their own goals, timeframe and tolerance for risk, please do not hesitate to speak with your Hennion & Walsh Financial Adviser.
Disclosures: Past performance does not guarantee future results. We have taken this information from sources that we believe to be reliable and accurate. Hennion & Walsh cannot guarantee the accuracy of said information and cannot be held liable. This information is provided for informational purposes only and is not a solicitation to buy or sell any of the asset classes or sectors discussed.
Investing in foreign securities presents certain risks not associated with domestic investments, such as currency fluctuation, political and economic instability, and different accounting standards. This may result in greater share price volatility. These risks are heightened in emerging markets.
There are special risks associated with an investment in real estate, including credit risk, interest rate fluctuations and the impact of varied economic conditions. Distributions from REIT investments are taxed at the owner’s tax bracket.
The prices of small company and mid cap stocks are generally more volatile than large company stocks. They often involve higher risks because smaller companies may lack the management expertise, financial resources, product diversification and competitive strengths to endure adverse economic conditions.
Investing in commodities is not suitable for all investors. Exposure to the commodities markets may subject an investment to greater share price volatility than an investment in traditional equity or debt securities. Investments in commodities may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity.
Products that invest in commodities may employ more complex strategies which may expose investors to additional risks.
Investing in fixed income securities involves certain risks such as market risk if sold prior to maturity and credit risk especially if investing in high yield bonds, which have lower ratings and are subject to greater volatility. All fixed income investments may be worth less than original cost upon redemption or maturity. Bond Prices fluctuate inversely to changes in interest rates. Therefore, a general rise in interest rates can result in the decline of the value of your investment.
MSCI- EAFE: The Morgan Stanley Capital International Europe, Australasia and Far East Index, a free float-adjusted market capitalization index that is designed to measure developed-market equity performance, excluding the United States and Canada.
MSCI-Emerging Markets: The Morgan Stanley Capital International Emerging Market Index, is a free float-adjusted market capitalization index that is designed to measure the performance of global emerging markets of about 25 emerging economies.
Russell 3000: The Russell 3000 measures the performance of the 3000 largest US companies based on total market capitalization and represents about 98% of the investible US Equity market.
ML BOFA US Corp Mstr [Merill Lynch US Corporate Master]: The Merrill Lynch Corporate Master Market Index is a statistical composite tracking the performance of the entire US corporate bond market over time.
ML Muni Master [Merill Lynch US Corporate Master]: The Merrill Lynch Municipal Bond Master Index is a broad measure of the municipal fixed income market.
Investors cannot directly purchase any index.
LIBOR, London Interbank Offered Rate, is the rate of interest at which banks offer to lend money to one another in the wholesale money markets in London.
The Dow Jones Industrial Average is an unweighted index of 30 “blue-chip” industrial U.S. stocks.
The S&P Midcap 400 Index is a capitalization-weighted index measuring the performance of the mid-range sector of the U.S. stock market, and represents approximately 7% of the total market value of U.S. equities. Companies in the Index fall between S&P 500 Index and the S&P SmallCap 600 Index in size: between $1-4 billion.
DJ Equity REIT Index represents all publicly traded real estate investment trusts in the Dow Jones U.S. stock universe classified as Equity REITs according to the S&P Dow Jones Indices REIT Industry Classification Hierarchy. These companies are REITs that primarily own and operate income-producing real estate.