Markets update: Volatility the story as S&P loses ground for the week

Markets | Tue 21 Nov | Author – Business & Finance arrow down stock

NFIB index shows small businesses’ optimism has increased and the UK is ready to unveil spending plans for the year in the upcoming budget, writes Ian Slattery.

ian slattery zurich

Ian Slattery

After treading water for the first two days of the week, the S&P 500 Index fell 0.53% on November 15, its first daily drop of more than 0.5%, or 50 basis points, in 50 trading sessions. Markets fretted about a wide range of issues, including uncertainty around tax reform and cracks in the high-yield bond market.

But on November 16, the S&P 500 jumped 0.8% – its best single-day return since September 11 – as the House passed its tax overhaul plan and several key companies announced encouraging third-quarter earnings results. The ‘risk-on’ mood proved to be short-lived, though. US equities stumbled the following day, ending the week with a 0.1% loss.

Markets fretted about a wide range of issues, including uncertainty around tax reform and cracks in the high-yield bond market.

On a more positive note, ‘soft’ economic data – reports based on US sentiment surveys – continued to strengthen. According to the National Federation of Independent Business (NFIB) index, small business optimism increased in October, extending its string of historically-high readings that began after last November’s presidential election. More business owners expect a pickup in sales and believe now is a good time to expand.

The global index fell -1.1% on the back of a volatile week in the US and in Europe, although YTD is still a healthy 7.1%.

Oil fell back from its recent upward trend, returning -0.3% but gold remained positive returning 1.4%.

Copper faltered last week returning -0.1%.

THE WEEK AHEAD

Monday 20 November

Thanksgiving week means that we have lots of US data crammed into the first three days, before Americans take Thursday off and enjoy a half day on Friday. Durable goods, and the Federal Open Market Committee (FOMC) minutes will be ones to watch.

Wednesday 22 November

UK budget statement: Chancellor Philip Hammond will unveil the British government’s spending plans for the year. Sterling could see some volatility if economic forecasts prove to be different from market expectations.

Wednesday 22 November

FOMC minutes: no changes were made at the last meeting, but commentary on the economy and policy outlook will influence USD pairs.

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