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AUTHOR: Jason J. Roque, CFP®, APMA®
TITLE: Investment Adviser Rep – CCO TAGS: Economic Data, Trade, Brexit, Japan |
Markets softened last week. Pick your poison, data showed strength while trade optimism faded. Which will have a lasting effect on the market?
Economic Data
The economic calendar was somewhat light last week. What data was released was generally positive. Housing data showed strength as building permits, new home sales, and existing home sales all improved. Services PMI rose, moving further away from contraction. The week ended on a positive note as University of Michigan consumer sentiment rose to the highest level since this past summer.
US/China Trade
A few bumps in the road to a trade deal arose last week. Congresses passage of a Hong Kong Human Rights bill puts President Trump in a precarious position that could delay the completion of a phase one deal. On the bright side of trade, a 3rd 90–day extension for companies doing business with Huawei was issued. This calmed nerves that a deal was not forth coming.
Brexit
The conservative party holds a commanding lead leading up to the December 12th election. Enough of a lead that some believe they will gain enough of a majority to be able to pass the current Brexit deal agreed to with the EU. UK markets advanced last week proportionately to the decline in the pound.
Japan
Exports in Japan softened over 9% again last month. The hike of sales taxes in October are being pointed to for the weakness currently being experienced. The hike was intended to artificially prop up inflation, but it has sent consumers for the exits. Behind the scenes Japan seems to be slowing their purchasing program. Recent weakness may result in that reaccelerating.
Conclusion
While economic data showed unexpected strength, trade data took the day… every day. Even with unexpected strong economic data, concerns over trade carried more weight. Luckily economic data should have a long-lasting impact on markets than one weeks trade doubts.
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