US: S&P 500 Index +1.6%, Dow +2.8%, Nasdaq +1.2%
Europe: STOXX Europe 600 -0.5%, German DAX +0.3%, France CAC 40 -0.3%, U.K. FTSE 100 +0.0%
Asia: Japan Nikkei +2.4%, China Shanghai Composite -0.3%, Korea KOSPI +0.5%
Rates/Commodities: 10-Year Treasury yield +4 basis points to 2.94%, WTI Crude Oil -0.3%, COMEX gold +0.4%
Major U.S. indexes advanced this week, though gains came on the heels of few notable catalysts. Along the way, however, both the Russell 2000 Index and Nasdaq posted new record highs after upbeat data on the services sector followed up last week’s better-than-expected reads on employment and manufacturing. On the recent data, LPL Chief Investment Strategist John Lynch noted, “Although inflation pressures increased as input costs rose, backlogs in non-manufacturing orders hit a record high and growth in services activity accelerated at rates not seen in three years, pointing to continued upside for the U.S. economy.”
Overseas, performance was more of a mixed bag as European indexes finished mostly lower on the week with figures released on the Eurozone services sector showing the rate of expansion hit an 18-month low in May, continuing the recent string of disappointing data in the region (a topic we discussed in this week’s Weekly Market Commentary). Adding to traders’ skittishness were headlines suggesting the European Central Bank (ECB) could begin serious discussions about the timetable for ending its bond purchase program when it meets next week. Asian markets fared better with most indexes in the region ending the week in positive territory, led by Japan’s Nikkei 225 Index. Meanwhile, emerging markets indexes surrendered early-week gains following a sharp selloff in Brazilian equities on Thursday that reverberated across the group as investors contemplated the potential negative ramifications of rising yields in the U.S. accompanied by dollar strength.
There will be no shortage of catalysts next week, following the likely contentious G-7 summit in Quebec over the weekend, with the U.S.-North Korea Summit kicking things off ahead of monetary policy meetings held by the Federal Reserve (expectations for a rate hike are near 100%), Bank of Japan, and ECB; along with a host of top-tier economic data. Monitor the week ahead with our Weekly Economic Calendar.
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