Many things impact equity markets on a daily basis.  Some have a great impact and some have very minimal impact.  Here are some explanations as to why.

Primary Influence

This would be data that directly influence the price of a stock and its current state.  The best example of this would be current earning, revenue, or news stories regarding a company.  These factors are paramount in the assessment of the value of a business.

Secondary Influence

Data in this grouping has a relevance to an industry, but due to other factors may not cause as much volatility.  Good examples of this would be the impact that an US housing starts report would have to a builder, manufacturing indices on manufacturing companies, and retail sales on retailers.  While these things are indicative of the overall environment for each industry, it is not specific to their production and sales.

Tertiary Influence

This grouping typically does not have a direct relationship to a sector or asset class, however other relationships could lead to a favorable or detrimental outcomes.  This could be something like geo-political events or natural disasters.  They have an immediate effect on the market as a whole, however much has to be learned about the actual impact past the head line in order to determine what areas of the market (if any) may feel long term impacts from the event.

A few other examples would be consumer price indexes, unemployment, and tax law changes.  Each of these have impacts on consumption, which in turn has an impact on corporate sales and earnings.

Now on to the past week on the market…

Market Data for the week ending 8/22

In the US we saw firming economic data with housing starts up 15.7% month over month (MoM) to 1,093,000, building permits up 8.1% MoM, Consumer Price Index (CPI) was flat at 2%, and new jobless claims fell back below 300K at 298K[1].  This shows a strengthening housing market, easing concerns around inflation, and an improving employment picture for the US.

International

The Eurozone had a good week of data in comparison to recent weeks.  French services PMI increased when a decline was expected, German manufacturing and services PMI’s both strengthened, while Great Britain’s CPI weakened and retail sales beat expectations.

China’s HSBC Manufacturing Index came in at 50.3 edging closer to contraction (above 50 marks expansion)[2].

Tensions in Ukraine eased as the standoff over humanitarian aid from Russia to pro-Russian areas of Ukraine defused and no military action was taken.

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Always remember that while this is a week in review, this does not trigger or relate to trading activity on your account with Financial Future Services.  Broad diversification across several asset classes with a long term holding strategy is the best strategy in any market environment.

Any and all third-party posts or responses to this blog do not reflect the views of the firm and have not been reviewed by the firm for completeness or accuracy.

[1] www.investing.com

[2] www.mfs.com