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Newsletter: In the Markets – Week-Ending June 23^rd, 2017

Crystal Brook Advisors

We Make Financial Planning Crystal Clear™

United States:  The LEI increased 0.3 percent in May, marking its ninth consecutive month recording a gain. Eight of the components added to the topline figure, while only one subtracted from it. (1)  Building permits was the only component that weighed on the index, shaving off 0.15 percentage points from the topline figure. This is consistent with housing starts data for May, in which both single-family and multifamily starts declined. (1)

Europe:  Few events outside of war can have quite as much potential impact on the economy of a country as Britain’s decision a year ago to leave the European Union. The momentous vote on June 23, 2016 has the potential to sever Britain’s ties to its main trading partner, a grouping it has spent more than four decades building ever-closer ties to. From subsidies for farmers to standards on consumer products and banishing all types of impediments to trade, the British economy is deeply enmeshed in the workings of the EU. Since the vote, the British economy defied the gloomy recession predictions of many, including the British Treasury and the International Monetary Fund. Other forecasts like an immediate house price crash didn’t materialize either. (2)

Asia:  When China got involved with Malaysia’s plan to build a new city right next door to Singapore, the project took off in a big way. Developers poured in cash and planeloads of Chinese buyers arrived to put down deposits for apartments yet to be built. But now the $100 billion city has hit a roadblock: China’s clampdown on an exodus of money used to purchase overseas property has spooked some buyers, who fear punishment for breaking the rules. And while building continues, developers are increasingly having to look outside China to fill the homes. It’s just one example of how China’s economic boom is causing ripples globally. Another is the effect that Chinese companies have had on Hong Kong’s stock market. Check out our infographic here. (3)

Latin America:  U.S. President Donald Trump has issued a directive to tighten travel and business restrictions on Cuba. He is effectively reversing Barack Obama’s efforts to “normalize” relations with the island; at a rally in Miami, he said, “I am canceling the last administration’s completely one-sided deal with Cuba.” (4)  The directive isn’t quite that extreme: It leaves in place some of Barack Obama’s changes, including an open embassy in Havana. But contra Trump’s “America first” foreign policy mantra, his move will have ramifications well beyond the Florida Straits – and it will probably damage Washington’s influence in Latin America. (4)

Monday 6/19  

• The Dow Jones Industrial Average (DJI) advanced 0.7% to close at 21,528.99, setting both an intraday as well as a closing high. The S&P 500 gained 0.8% to close at a record level of 2,453.46. The tech-heavy Nasdaq Composite Index rose 1.4% to finish at 6,239.01, marking its largest one-day percentage and point wise move since Nov 7 last year. The Dow, the S&P 500 and Nasdaq have advanced 8.9%, 9.6% and 15.9% respectively on a year to date basis. (5)

Tuesday 6/20

• Crude plunged into a bear market on Tuesday, sinking another 2.2% to settle at a nine-month low of $43.23 a barrel. (6)

Wednesday 6/21

• The S&P 500 index SPX, +0.16%  closed with a loss of 1.42 points, or less than 0.1%, at 2,435.61, with eight of the 11 main sectors in negative territory. A drop in oil prices put pressure on energy shares, which fell 1.6%. Heath-care and technology shares were top gainers, up 1.2% and 0.7%, respectively. (7)

Thursday 6/22

• S. stock indexes held steady Thursday after the price of oil took at least a temporary break from its sharp slide. (8)
• Energy stocks fell again, but not by nearly as much as earlier in the week, after crude rose for the first time in four days. Big gains for health care stocks also helped to offset losses for financial companies and other areas of the market, leaving indexes close to flat. (8)

Friday 6/23

• Stocks moved mildly lower Friday as the Nasdaq and Dow industrial each dipped 0.1% slip. (9)
• Despite the slip, the tech-heavy Nasdaq composite is on pace for a 1.3% weekly gain, which comes after two consecutive weeks of relatively heavy losses. The Dow Jones industrial average showed a fractional loss for the week. The S&P 500 edged early Friday, defending a slim gain for the week. (9)

Contributor: Thomas Padula

Source: (1) Wells Fargo Economic Group, (2) The Washington Post, (3) Bloomberg, (4) UPI, (5) NASDAQ, (6) CNN Money, (7) Market Watch, (8) ABC News, (9) Investor’s Business Daily