Mild gains during the week got wiped out on Friday in U.S. markets. The Dow wiped out its gains from 2015 with Friday’s selloff as commentators threw out several possible reasons for the fall ranging from new Chinese margin rules to Greece to poor core CPI data.
While consumer sentiment remains supportive of U.S. bullishness other data point to concerns. Retail sales published on Tuesday came in weak while the IM’s World Economic Outlook lowered its GDP forecast for 2015.
Chinese GDP data for Q1 hit the government’s 7.0% target but serious doubt remains about the accuracy of the publication. Industrial production, fixed investment and retail sales all missed considerably for the same time period.
European markets did not escape selling pressures this week with the DAX dropping more than 5%. Mario Draghi pledged a commitment to the central bank’s plans to boost inflation and issued an encouraging tone towards results so far.
Greece is running out of time to reach a deal with its European counterparts prior to an April 24 deadline. Greece is trying to come to an agreement on a reform program that will unlock billions of Euros, money vastly needed as over €1 billion is due to the IMF in May and public sector employees need to be paid.
News broke late in the week that Greece approached the IMF about a “soft” restructuring of debt due next month. The IMF rebuffed the request, helping to send two-year yields to over 26% for the country.
Energy was the only sector to post gains in the U.S. this week. The build in inventories is slowing and the fall in the rig count has helped raise prices. The latest Energy Outlook published raised long-term production forecasts for the U.S. out until 2040.