Weekly Market Recap
Week in review
- 15/07 – CN – GDP, Fixed Investments, Retail Sales, Industrial Output
- 16/07 – U.S. – Retail Sales, Industrial Production
- 17/07 – U.S. – Housing Starts
Thought of the week
U.S. equities closed at record highs last Wednesday after Federal Reserve Chairman Jerome Powell warned Congress of continued uncertainties in the U.S. economy, reinforcing the market’s expectation of a rate cut in July. The S&P 500 and DJIA broke respective thresholds of 3,000 points and 27,000 points for the first time in history. A strong JOLTS jobs report and a truce in the U.S.-China trade war had initially worried investors that the expected rate cut would be off the table. However, Fed Chair Powell dismissed these developments, highlighting that weak economic momentum abroad, mounting U.S. debt, unresolved trade tensions, and Brexit could all affect the U.S. economy. Markets are now pricing close to a 100% probability for a 25 bps cut at the Fed’s July meeting, pulling back slightly due to a higher than expected CPI inflation reading. Though a rate cut may support equity markets, investors should be wary that it too reflects the Fed’s dismal outlook for the economy.
Chart of the week
Fed’s Congress address affirms rate cut expectations
JPMorgan China Income Fund
To provide investors with income and long-term capital growth by investing at least 70% of its non-cash assets in (a) equity securities of companies which are based in, listed on any stock exchange of, or operate principally in the PRC and that the Investment Manager expects to pay dividends and (b) Chinese debt securities issued and/or distributed in or outside the PRC.