Julex Market Weekly 06-02-2013 | US Stocks Declined for Another Week

Top Stories Last Week

• US Stocks Declined for Another Week

U.S. stock markets declined this week, but still finished the month with healthy gains. Treasury yields surged to the highest levels in more than a year, after a strong housing report fuelled fears that an improving economy could push the Fed to taper its bond purchases earlier than expected. In the week, S&P index dropped 1.1%, and MSCI EAFE index declined 2.2%. The MSCI Emerging Market Index tumbled by 3.0%. Gold price climbed 0.1%. The SPGC commodity index was down 1.4%. The bond markets were sold off too. Barclays US Treasury index declined by 1.0%, and US high yield bonds was down 1.9%.

• US Housing Markets Continue to Be Strong

The Standard & Poor’s Case-Shiller home price index showed the biggest gains in seven years. Housing prices rose in every one of the 20 cities tracked, continuing a trend that began three months ago. Similar strength has appeared in new and existing home sales and in building permits, as rising home prices are encouraging construction firms to accelerate building and hiring. The broad-based housing improvements appear to be buoying consumer confidence and spending, countering fears earlier this year that many consumers would pull back in response to government austerity measures.

• Japanese Stocks Entered “Correction” Territory

The Japanese stock market has entered “correction” territory, down about 11% from a five-year high reached on May 22. On the week, the Nikkei Index fell 5.73%. The Japanese stock market has been the best performer year to day.

• Bank of Canada Held Its Interest Rate Steady

The Bank of Canada held its benchmark interest rate steady at 1%. That’s the same level it has been at for 22 consecutive policy meetings. In a statement, the bank said that the Canadian economy performed better than the bank expected in the first part of 2013. But it expects growth to moderate through the year, expanding by about 1.5% as a whole. That likely isn’t enough to compel the bank to raise rates to slow things down and rein in inflation, nor is it sluggish enough to lower the benchmark rate to stimulate the economy further and spur borrowing.

• Euro Zone Unemployment Rate Hit Another Record

Unemployment across the 17 European Union countries that use the euro has hit another record high, the latest weakness for the ailing single currency zone. Unemployment rose to 12.2% in April from the previous record of 12.1% in March. Another 95K people joined the ranks of the unemployed, taking the total to 19.38 million. The figures also mask big disparities among countries. While over 25% of people are unemployed in Greece and Spain, Germany’s rate is down at 5.4%. Inflation in the eurozone rose to 1.4% in the year to May from 1.2% in April. Still, inflation is below the European Central Bank’s target.

Top Stories to Watch This Week

• US ISM Manufacturing Index

US ISM manufacturing index should improve to 52.1 in May according to eocnomists’ survey.

• European Central Bank Interest Rate Decision

ECB is expected to hold interest rates unchanged after May’s cut.

• US Employment Rate and Nonfarm Payrolls

Economists forecast that US added 175K jobs in May and unemployment rate stayed at 7.5%.