Weekly Digest - INVESTEC
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Equity markets have had a positive start to the new quarter today, with all major European markets higher and positive Asian markets overnight. US equity markets finished higher on Friday, pushing the S&P500 (US equity market) to the best Q1 since 1998. The market has only risen +10% in Q1 four times since 1990.
Financial markets generally bounced in the first quarter of 2019. Deutsche Bank show that 37 out of their top 38 asset classes rose over the past three months in local currency terms. Highlights included the best quarter for West Texas Intermediate oil (+32.4%) and the S&P 500 (+13.6%) since 2009. The Shanghai Composite Index rose by 24% and the Eurostoxx 600 by 13.3%.
China is the key driver of today’s equity market strength, as economic data suggested that recent reflation policies are taking hold, with manufacturing data recording the biggest rise since 2012. This is potentially good news for European economies, where recent poor economic performance has again been highlighted by a set of weak German manufacturing data released this morning. Additionally, China has suspended planned tariffs on US car imports as a goodwill gesture, following similar recent moves by the US. This comes amid rising optimism that progress is being made on a wide-ranging US/China trade deal, for which talks will continue at a high level in Washington this week.
Elsewhere, Facebook called for more government regulation of the internet as it faces rising criticism of its platform, while ride-hailing company Lyft saw its IPO at $72 initially well-received with the stock rising more than 20% at one stage on Friday, before settling back to close 9% higher but it is down sharply today -11.2% as I type at $69.60.
In the UK, Parliament again takes control today with a series of indicative votes scheduled this evening. This takes place against a backdrop of general election chatter as well as Tory pressure on PM May for a no-deal Brexit, with the media reporting that 170 Tory MPs wrote to the PM requesting a no-deal departure.