Gerald Fitzgerald’s Market Review April 1st

LAST WEEK IN 30 SECONDS...

Whilst Donald Trump proclaimed his innocence following the release of the Mueller report findings, last week saw the first quarter of 2019 end on a high for markets. Propelled in large part by positive momentum on trade discussions between the US and China, the S&P 500 was up +1.2% over the week leading to the best start in 21 years for US equities. This was further helped by the US dollar strengthening by +0.48% over the Euro. Global Equities have finished the quarter +14.1% in euro terms.

Despite the risk on environment, global bonds continued their downward trend this week with the German 10-year bond yield falling to fresh lows before closing the week at -0.07%, or in simple terms locking in a negative return were you to buy the bond and hold to maturity.

THIS WEEK IN 30 SECONDS...

Brexit has turned into a festering wound. In an effort to remedy the situation, Theresa May once again looks to the UK parliament this week for guidance on what solution is ultimately agreeable by the majority. With little antiseptic available, the longer this never ending story limps on this wound has the potential to irreparably damage not only the Conservative party but the wider European union. With markets anticipating some deal will ultimately be reached, a no-deal scenario could result in a challenging start to Q2 2019.

From a data perspective, Euro PMI and retails sales figures are due for release on Wednesday with US unemployment data and non-farm payrolls due for release on Friday.

SHALE’S AMERICAN MUSCLE

A barrel of oil has increased in cost by almost a third over the start of the year. OPEC has long seen itself as the tap for global oil supply. With OPEC stifling its own supply to control price, the ultimate winners are US shale producers who are agnostic to OPEC’s view on supply. Production in the US has ramped up to almost 8 million barrels per day. Whilst the shale boom has helped the American economy, shifting its trade balance and becoming less dependent on oil imports, the reduction of OPEC’s influence on American policy is of key significance.