Equity Review: Bearish macro data has limited effect on stocks

After a break in its 20-week winning streak, STOXX 50 was back on its upward track last week. US stocks, however, continued their downward slide. Despite having started the week strongly, the S&P 500 ended the week 0.3 percent lower. 

On a sector level, all sectors were traded downwards, with the cyclical Non-Energy Minerals being the biggest loser. The broad market performance was mixed, however. The PIGS were amongst the highest gainers, with Portugal was the top winner, gaining 3.5 percent.

The week introduced a number of international macro data which in total were to the low side of expectations and still pointing to global growth losing steam. US consumer confidence continued to decline (it is now at 60.6) pointing to a lower level of consumption going forward. Chicago PMI declined from 53.7 to 53 and retains its weak tone. Profits from the national account showed lower growth and point to a struggling corporate America.  From Europe, Germany reported a declining IFO and retail sales with large downward revisions and yearly growth ending at -1.0%, a lot lower than expected. Spain also reported retail sales lower, in the Spanish case by 7.3 percent y-o-y.

The Asian equity markets showed signs of weakness, with both Hang Seng and Nikkei being traded downwards for the week. China doesn’t seem to be able to escape the downdraft from the US and Europe, and we should therefore expect Chinese government initiatives soon to bolster growth.

For this week, look out for ECB chairman Draghi speaking today. The US job report on Friday will take all the attention from Wednesday onwards, as this is a key number to gauge the state of USA.