Market Action

•  Stocks in the US ended their positive run with a down week. Data such as retail sales and consumer confidence were disappointing relative to expectations. Escalated turmoil in Iraq and Syria cooled risk taking sentiment.
•  Energy markets saw big gains on the news that two of Iraq’s largest cities had fallen to a Sunni insurgency and Baghdad was in danger as well. Iraqi oil production hasn’t been taken offline but the threat unsettled markets. OPEC’s meeting in Vienna ended without any newsworthy changes to production schedules.
•  Asian markets were up as Japan revised Q1 growth upwards. Analysts were especially encouraged that capital expenditures also experienced a boost in the revision. Japan also announced a more competitive corporate tax rate will be employed. In China sentiment is consolidating that the government will support growth through fiscal and financial measures.
•  Market commentary in the wake of Mario Draghi’s stimulus action announced last week remains mixed at best. Doubt remains strong that deflationary trends remain too entrenched and that the action announced last week is too little too late. Further, support for the ABS market is being met with skepticism on its efficacy and relevancy. The Euro ended the week below € 1.36, revisiting lows posted after Draghi’s press conference last week.
•  The Bank of England’s Mark Carney announced in a speech on Thursday that the central bank could raise rates sooner than markets were anticipating. The IMF encouraged policymakers in Britain to cool the real estate market. Macroprudential tools have not quelled rising prices so far.
•  M&A Activity in the US boosted markets early in the week before geopolitical risk disrupted upward momentum. Tyson Foods purchased Hilshire and Merck bought Idenix on hopes of the latter’s Hepatitis C drugs.
•  Gold recorded its largest weekly gain in two months.

View Full Market Update (PDF)