Julex Market Weekly 06-16-2013 | Global Stocks Dropped as Bank of Japan Disappointed Investors

Top Stories Last Week

• Global Stocks Dropped as Bank of Japan Disappointed Investors

Global stock markets lost ground last week as Bank of Japan refrained from taking further easing measures, disappointing investors. In the week, S&P index dropped 1.0%, and MSCI EAFE index declined 0.5%. The MSCI Emerging Market Index tumbled by 3.2% as market volatility picked up. Gold price was up by 0.4%. The SPGC commodity index rallied 3.2% on rising oil prices. The bond markets gained as investors shed risks. Barclays US Treasury index climbed by 0.2%, and US high yield bonds was up 0.4%.

• US Retail Sales Rose 0.6% in May

Sales at U.S. retailers rose more than forecast in May, indicating consumers may help propel the world’s largest economy past a second-quarter slowdown. Retail sales climbed 0.6%, the biggest gain in three months, following a 0.1% April increase. The surge was largely driven by a jump in auto sales, which generate about one-fifth of all retail spending. Auto companies sold 1.4 million vehicles, helped by greater discounts or other financial incentives for buyers. Excluding autos, retail sales rose a smaller 0.3%. Sales also rose for suppliers of building materials and garden-related goods, grocery stores and Internet retailers. Warmer weather boosted sales at home improvement stores such as Home Depot and Lowe’s that cater to builders and gardeners.

• Bank of Japan Stayed Pat

The Bank of Japan refrained from taking any additional measures to stimulate growth and ease market volatility, citing signs of economic recovery, but disappointing investors who expected new action to address problems in the government bond market. The bank’s large-scale bond-purchasing program has prompted sharp swings in the government-bond market, and some investors expected the bank to try to address that by expanding a bank loan program. The BOJ offered a relatively upbeat projection for Japan’s economy, a day after the government upgraded its own assessment for growth in the first quarter, saying Japan’s GDP expanded at 4.1% annual pace, the fastest among the advanced economies. The bank cited improvements in exports, resilience in business investment and private consumption.

• A Moderate Reformer Won Iranian Presidential Election

Moderate cleric Hassan Rohani won Iran’s presidential election with a resounding defeat of conservative hardliners, calling it a victory of moderation over extremism and pledging a new tone of respect in international affairs. Though thousands of jubilant Iranians poured onto the streets in celebration of the victory, the outcome will not soon transform Iran’s tense relations with the West, resolve the issues over its nuclear program or lessen its support of Syria’s president in the civil war – matters of national security that remain the domain of Supreme Leader Khamenei.

Top Stories to Watch This Week

• FOMC Meeting

FOMC will meet on Tuesday and Wednesday to decide on monetary policy. Investors will look for hints on the timing of tapering quantitative easing.

• US CPI Inflation

The inflation in the US is expected to remain subdued.

• HSBC Chinese PMI Index

Investors will get a chance to see how healthy the Chinese manufacture sector, which contracted last month.

• US Existing Home Sales

US housing sector should remain strong and existing home sales in May is expected to be 5.01MM.