Repost: Global Markets Rally February

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Global markets rallied last week. The MSCI World Index gained 1.43% while the SPX Index gained 1.62%. The ex-US markets were a bit more subdued. The Nikkei was flat 0.08% (in local currency), and the FTSE Euro ETFs (reported in USD) gained 0.95%.


Weakness in China

The week opened down as weakness in China caused chipmaker NVIDIA (-9.63%) and construction company Caterpillar (-4.35%) lowered profits forecasts. A sizeable portion of revenues, 70% and 22% are attributable to the Asian region for NVIDIA and Caterpillar, respectively.


United States Government Shutdown Ended

The longest government shutdown in US history ended after a 35-day standoff. The Congressional Budget office estimated the shutdown cost $11 Billion in economic activity. ABC News polls showed the average American was disproportionately blaming Trump and the Republican party. Unsurprisingly, this was split along party lines with independents explaining the difference. Ending the shutdown backfired amongst the President’s base, who view this as an outmanoeuvring by the opposition. We should see some makeup on spending since paychecks have been restored, though some of that spending will not be recovered. This is unlikely to have an impact on the 2020 elections as we are too far out.


Macroeconomic Data

Macroeconomic data was generally positive, beating or meeting expectations in 73.5% of key global metrics. This should reinforce the notion that part of this rally is justified.



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