Trade talks were the center of attention at the beginning of the week, as they have been for a while. China was more adamant on continued talks before jumping into “Phase 1” of the trade deal between the Asian nation and the US. In the next month, Xi and Trump are set to meet and optimism sparked again of a potential preliminary deal on the line.

Throughout the rest of the week, Brexit was the center of attention and the beginning of Q3 earnings. UK PM Johnson and some EU officials had publicly confirmed that the October 31st deadline may be a successful one for the UK in leaving the EU. The EU is more interested in the new deals proposed by the UK.  But sentiment was far from exuberant as it remained unclear if this version of a deal can get the nod from the UK Parliament at its “super Saturday” sitting. The potential Brexit deal brought life to the pound this week against the greenback, hitting a month long high at the end of the week.

Global economic growth slowed this week, mainly out of the Eurozone and the US. Retail sales and building starts out of the US suggested stagnation. The slower economic numbers are starting to foreshadow rate cuts towards the end of the month after promised no further rate cuts for the remainder of the year. By the end of the week, the odds of a rate cut on October 30th increased to nearly 92%. But a narrative also developed that a pause on any further easing was gaining traction, especially in light of the recent positive developments regarding Brexit and US/China trade. This week, US yields increased on expectations of a rate cut increased and Euro rates dropped.

The earnings season started this week and earnings began on a good note. JPMorgan was one of the first financial firms to report earnings and beat expectations well. Bank of America beat as well, Morgan Stanley beat as well, the main financial firm that missed was Goldman Sachs. They missed on profit expectations, along with Citigroup that saw net margins decline.

More news out of Boeing this week as there were instant messages within the company that surfaced from 2016 that there were concerns over the 737 MAX MCAS software taht was not brought to anyone’s attention. On this news, the stock slipped. Johnson & Johnson recalled a lot of talc baby powder in the US after a test indicated the presence of sub-trace levels of chrysotile asbestos contamination.

Here is a look of last week’s stock market on a daily basis (red vertical lines split days).

Stock Market and Sector Overview

Here is a break down of the weekly performance in various stock market sectors (top chart):

  • Energy stocks down 0.99%
  • Technology down 0.86%
  • Financials up 1.85%
  • Retail up 0.93%
  • Utilities down 0.16%

Overview of key markets last week (bottom chart):

  • Crude oil down 1.61%
  • S&P500 up 0.61%
  • Silver was up 0.11%
  • Gold up 0.17%
  • US dollar down 1.08%

Weekly Economic Calendar

Not much news this week after we had a plethora of Fed speakers in the prior week. There is limited news out of the US as we anticipate further news out of the US and China in terms of trade talks and a Phase 1 deal.
Monday, no high impact news.
Tuesday, retail sales out of Canada and the BOC Business Outlook Survey.
Wednesday, Crude oil inventories out of the US.
Thursday, French and German flash services and Manufacturing PMI comes out. Main refinance rate out of the ECB and Eurozone is set to come out. This will be an interesting report release. Followed by a press conference and monetary policy statement. US releases core durable goods orders as well.
Friday, no high impact news.

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