The U.S. Stock market rose this Thursday––the S&P 500 recovered from a four-day losing streak with +0.4%––as investors look up for progress on the trade deal between the U.S. and China. The heads of both countries prepare to meet at the G-20 meeting of the world’s largest economies this weekend. It is believed that the Chinese President Xi Jinping plans to present President Trump a specific set of terms that the U.S. must meet before Beijing is ready to settle a trade confrontation. The plan may insist the U.S. to remove its ban on the sale of U.S. technology to Chinese telecommunications giant Huawei Technologies Co.
European indexes were little changed. While European consumers were more optimistic, the overall European Economic Sentiment Indicator hist its lowest level since August 2016. The slowdown in Europe may be portraying expectations of potential rate cuts to come from the European Central Bank. Asian stocks also rose on hopes that the U.S. and China will reach a deal on trade. The Shanghai Composite ended the week up 0.7%.
The 10-year U.S. Treasury note yield dipped below 2% last week but rose back to 2.049% as of June 28, 2019 as a result of what we believe to be collective positiveness on trade deal progress with the two major economies. Recalling the mechanism, yields tend to rise when bond prices fall. Treasury yields rose further Wednesday after weekly inventory data showed U.S. crude-oil stockpiles fell last week, signaling a potential increase in fuel consumption. U.S. crude-oil prices rose 2.7% this Thursday to a one-month high. Many economists crude-oil as an economic indicator because of its importance in the shipping and transportation industries.
Banks Passed their Test
The Federal Reserve said the biggest U.S. banks are healthy enough: the 18 banks they reviewed passed two rounds of the Fed’s stress tests. Stress tests are an annual exercise designed to determine a bank’s ability to cope with a downturn in the economy. The results show that these banks and the financial system may be more resilient under stress.
The Organization of the Petroleum Exporting Countries (OPEC) is an intergovernmental organization of 14 nations, founded in 1960 in Baghdad, Iraq with headquarters in Vienna, Austria. Their 14 member-states accounts for 44% of oil production in the world and 81.5% of the world’s oil reserves, giving OPEC a major influence on global oil prices. Economists often refer to OPEC as a textbook example of a cartel that cooperates to reduce market competition.
As of this Friday, OPEC is set to extend its oil production cuts into the second half of this year, as the group and its allies struggle with Middle East tensions that threaten crude supply and economic weakness in China that could affect demand.