Market Update: Thurs, Nov 7, 2019 | LPL Financial ResearchSubmitted by Saratoga Financial Services on November 7th, 2019
Stocks rise. U.S. stocks are higher this morning on news that the United States and China have both agreed to roll back tariffs if a limited trade agreement is reached. Today’s headlines are the latest in a string of optimistic trade developments between the two nations, and all signs point to the United States and China signing a “phase one” trade deal before the end of the year.
European Commission cuts European growth forecast. The European Commission cut its euro-area growth forecast to 1.1% for 2019 and 1.2% for 2020. The new forecasts are slightly below Bloomberg consensus forecasts for the region, and slightly above our expectations for growth near 1%.
Bank of England provides gloomy outlook. The Bank of England held interest rates unchanged and lowered its 2020 growth outlook for the U.K. while providing somewhat dour commentary on risks to growth, including a possible disorderly exit from the European Union (Brexit). The central bank’s bias points to a rate cut in 2020, which markets are increasingly pricing in.
Solid rebound for international stocks. Global stocks are joining the march to record highs. On November 6, the MSCI All-World Country Index closed 1.5% away from an all-time high reached in January 2018. Emerging market and developed market stocks have outpaced U.S. stocks since August, even though they have yet to reach record highs. International performance has benefited from signs of stabilizing growth in international economies, a weaker dollar, and the U.S.-China trade de-escalation.
Productivity growth fades. Stalled business spending is now having ripple effects on U.S. company efficiency. Nonfarm productivity declined in the third quarter after averaging the fastest growth since 2014 in the first two quarters of the year. Sustained productivity growth has been a tough feat in this economic expansion, thanks to muted capital expenditures growth for most of this cycle. Today on the LPL Research blog, we’ll dig into third-quarter productivity data, and highlight why productivity is an important economic trend to watch.
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