A positive week for global equity markets. The S&P 500 Index traded higher as did NASDAQ. The U.S. announced a trade deal with Mexico over the weekend, propelling the S&P 500 to its best gain of the week on Monday. After last week’s rally, the S&P 500 is up 4.9% (in USD) in June and just 2% away from its record close.
U.S. economic data was positive. Business optimism climbed to a seven-month high in May, and retail sales increased for the third straight month. Consumer Price Index and Producer Price Index reports indicated wholesale price and consumer inflation slowed.
Global stocks also rose for a second straight week also encouraged by trade prospects after the United States rescinded tariff plans for Mexico. Chinese stocks posted their best week since April (+4.27% in AUD) as investors appreciated government stimulus efforts, despite President Trump’s threat to raise tariffs again if President Xi does not meet with him at the G-20 Summit later this month.
Weak AUD an extra bonus for local overseas investors.
Weekly returns to 14 June 2019
(AUD 5-day return far right- hand column)
Notable company news
Dassault Systemes (EPA: DSY)
Dassault Systèmes has agreed to buy Medidata, a US specialist in analysing data from clinical trials, in the largest deal yet for the software group as it looks to push into the fast-growing life sciences sector. The French company is paying cash for Medidata in a deal that values the New York-based company at $5.8bn, including debt. Medidata’s technology is used by about 1,300 customers in the development and commercialisation of drugs. The company generated revenues of $636m in 2018. The deal has been unanimously agreed by the boards of both companies. It is expected to close in the final quarter of 2019, subject to regulatory and shareholder approval.
Dassault Systemes is held in Macrovue’s Artificial Intelligence thematic share portfolio.
- 10-Year Treasury yield: 2.08%
- Gold: +0.3% to US$1,345.4/oz
- WTI crude oil: -2.7% to US$52.52/bbl
- AUD/USD: -1.24% to 68.74
The week ahead
The economic calendar is normal, highlighting housing data, leading indicators, and of course the FOMC decision.
The Federal Open Market Committee meeting and follow-up press conference with Jerome Powell is set for June 19 at 2:30 p.m. S&P expects the Fed to signal at its June policy meeting next week that it “intends” to cut rates. Right now, federal funds futures trading is pricing in two rate cuts before the end of the year, but only a 23% probability of a cut at the June meeting.
Charts of the week
1. Economists’ predictions on interest rates? A Huge Fail!
2. Mobile killing it!
Source: Goldman Sachs