Weekly Update - June 22, 2018
- Stock markets sustained losses over a week of high volatility, succumbing to escalating trade tensions as the Trump administration threatened more tariffs on Chinese goods and European cars. Stocks of agricultural firms, automakers and industrial companies took the hardest hits. The Dow Jones Industrial Average marked its longest string of down days in more than a year.
- Oil prices and oil company shares rose after OPEC agreed to increase production by less than expected. In contrast, gold prices fell for the week, a sign that investors might be hoping a trade war would not materialize. The 10-year U.S. Treasury yield fell to 2.86% before closing the week at 2.89%.
- The NAHB housing market index of homebuilder sentiment declined to 68 in June from 70 in May. The NAHB attributed the decline to higher homebuilding costs, a result of tariffs on Canadian lumber.
- U.S. existing home sales declined 0.4% percent in May to an annual rate of 5.43 million units, down from a rate of 5.45 million in April. Economists had expected a 1.5% increase to 5.52 million.
- U.S. housing starts jumped 5% in May to an annualized rate of 1.35 million units, following a 3.1% drop in April. Starts hit their highest rate since July 2007, mainly on a rebound of multi-family construction.
- The IHS Markit Flash U.S. Composite Purchasing Managers Index (PMI) registered 56.0 in June, a slight decline from May. Economists took the June reading as a signal that manufacturing and service business activities continue to expand at one the fastest rates in recent years.
- The IHS Markit Eurozone Composite PMI rose from 54.1 in May to 54.8 in June. While better than the 18-month low seen in May, the June reading underscored the tepid pace of business activity growth so far in 2018. At the same time, eurozone consumer confidence dropped to -0.5 in June, its lowest reading since last October.
- The IHS Markit/Nikkei Japan Manufacturing PMI rose to 53.1 in June from 52.8 in May. Manufacturing expanded at a faster pace than the previous month but export orders contracted for the first time in almost two years.