Market Action

  • The past week started positively for risk assets but turned sour on Thursday and Friday with markets reverting to their trends for the first six weeks of the year. Some disappointing earnings reports from leading names, including Apple, and chatter from the Fed about a possible June rate hike pushed investors towards the yields offered by Telecoms and Utilities.
  • China’s central bank fixed the yuan to its highest level since the August depreciation. Earlier in the week total debt to GDP was reported as 237% according to the Financial Times.
  • The Bank of Japan meanwhile surprised markets by holding off on more stimulus and extending its inflation goal out to 2017, the fourth such delay. The Nikkei tumbled over 3% on Thursday and more than 5% for the week.
  • Saudi Arabia’s Crown Prince announced his “Saudi Vision 2030” plan to reduce the Kingdom’s excessive reliance on oil revenues. Among the provisions included in the plan is an IPO of Saudi Aramco which could be worth more than $2 Trillion, the world’s largest sovereign wealth fund, and a goal to become one of the 15 largest economies in the world.
  • Several data points out of Europe paint an encouraging picture. Italy’s GDP grew better than expected and the unemployment rate fell to its lowest point in over four years. Spain and France also pointed robust GDP growth figures relative to historical levels.
  • British GDP slowed in the first quarter to 0.4% according to revised data. Growth for the past year still came in above expectations but concerns are present that the Brexit vote is weighing on economic uncertainty in the country and stifling markets.
  • Crude oil rose over 22% in the month of April, the highest monthly gain in seven years. The weak dollar, thanks to easier central banking guidance, and declines in U.S. production have propelled oil over the past month.

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