AFTERNOON │ MARKET UPDATE GLOBAL MARKET SNAPSHOT Equity Markets: Markets finished mixed on Tuesday after President Trump floated a threat of new tariffs on Europe and the IMF released a downward revision to its 2019 global growth forecast. Top performers came from the ASEAN region with Indonesia and Thailand seeing their headline indices gain +0.9% and +0.7%, respectively. A notable laggard today was Norway whose OBX Index fell -1.1%. With 92% of constituents were in the red, the largest detractor (and largest constituent) was Equinor that weakened in response to a parliamentary majority opposing oil exploration off the Lofoten islands which the company has said is essential to the country maintaining its current production levels. In the U.S., recent factor sentiment flipped with momentum leading while sell-side sentiment and volatility lagged. Industrials -1.4% and energy -1.3% led the move lower on a sector basis, while utilities +0.3% strengthened on the riskoff move. Bond Markets: Bonds strengthened broadly across developed markets with little in the way of catalysts. Markets await tomorrow’s release of U.S. inflation data and FOMC minutes for further guidance.
Currency Markets: The U.S. dollar index finished flat after digging out of a 20bps hole. G-10 crosses were not much changed with the exception of Japanese yen that strengthened +0.3% with much of the strength coming on the release of the IMF’s World Economic Outlook. Indian rupee +0.5% led among emerging markets, breaking a three-day losing streak, on regional strength and foreign flows.
Commodity Markets: The Bloomberg Commodity Index slipped -0.2%, breaking a six-day winning streak. Gold +0.5% partly offset weakness elsewhere. The rally in crude took a breather with WTI lower by -0.3% to $64.22 per barrel. Wheat 1.2% diverged from the rest of the grains complex after the USDA cut its forecast for exports.
MACRO OVERVIEW The International Monetary Fund (IMF) released its biannual World Economic Outlook in which it revised down its global growth outlook. The IMF projects that the global economy will grow 3.3% in 2019, a downward revision of 0.2 percentage points from their January forecast and 0.4 percentage points from October. This would also represent a slowdown from the 3.6% rate of growth seen in 2018. According to the report, 70% of economies will see growth slow in 2019, with the most prominent negative revisions being seen in the euro area, the United States, the United Kingdom, Canada, and Australia. Looking out to 2020, the view was more favorable with the growth forecast held at 3.6% as some of the negative factors in play now are set to shift positive, e.g., U.S. monetary policy, Chinese fiscal and monetary actions, and a possible trade agreement between the two countries.
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