Julex Market Weekly 03-17-2013 | US Stocks Ended the Week Higher While Emerging Markets Tumbled

Top Stories Last Week

• US Stocks Ended the Week Higher While Emerging Markets Tumbled

The US stock ended the week higher on the stronger retail sales and improving initial jobless claim data. However, the emerging markets closed lower as weaker industrial production growth in China concerned investors. The S&P 500 Index rose by 0.7%, and MSCI EAFE index rallied 0.8%. But the MSCI Emerging Market Index tumbled 2.7%. Gold price was up slightly by 0.8%. The SPGC commodity index also gained 0.8%. The bond markets gain as well. Barclays US Treasury index rose 0.5% while US high yield bonds gained 0.4%.

• US Retail Sales Rose 1.1% in February

Americans spent at the fastest pace in five months in February, boosting retail sales 1.1% compared with January. Excluding gas purchases, retail sales rose 0.6%. The stronger-than-expected gain in retail sales is good news for the economy, of which consumption accounts for 70%. Some economists said the increase means the economy may be growing more quickly than expected.

• US Inflation Remained In Line with the Fed’s Target

A spike in gas prices drove Consumer Price Index up by 0.7% in February, the most in more than three years. But excluding fuel costs, inflation was mostly modest. For the 12 months that ended in February, prices increased 2.0%. That’s in line with the Federal Reserve’s inflation target. Excluding volatile food and energy costs, core inflation rose just 0.2% in February.

• Chinese Industrial Production Growth Was Disappointed

China’s industrial production grew weaker than expected in January and February 2013, growing 9.9% after a 10.3% increase in December. The deceleration was due to slowing growth in oil and electricity production. Continued investment growth is still expected to push production higher but the process may take longer. China’s industrial output had the weakest start to a year since 2009 and lending and retail sales growth slowed.

• European Industrial Production Dropped More Than Expected

The eurozone economy may experience a further contraction in the first quarter of 2013 as traditionally stronger economies such as Germany, Finland and France suffered a more-than-expected drop in factory output in January.

Industrial production across all 17 countries fell 0.4%, which exceeded forecasts by economists polled by Bloomberg, which had predicted a 0.1% fall. The contraction in output contradicts recent surveys showing improved business sentiment among purchasing managers and highlights how the reality on the ground continues to be grim.

Top Stories to Watch This Week

• Cyprus Bailout

Europe’s surprising decision early Saturday to tax bank depositors in Cyprus in latest euro zone bailout package set off increasing outrage and turmoil in Cyprus on Sunday and fueled fears that the trouble will spread to countries like Spain and Italy.

• Fed Meeting

The Fed is expected to keep monetary policy unchanged. Investors will look for hint on any sign of early ending of QE.

• Chinese Manufacturing Activities

HSBC PMI Index will show how robust the recovery of Chinese economy is.

• US Housing Data

Existing home sales and housing index will be likely to show continuing improvements in the US housing sector.