Last week, positive sentiment persisted in the stock market and investors remained buyers of stocks. Among principal variables was positive economic data from China and press announcements of central banks, in which the members did not miss a chance to repeat themselves, that they are ready to encourage economic stimulation if the situation would require that.
NASDAQ, Dow Jones, and S&P500
In the U.S. stock market, the best performer was the Nasdaq Composite, whose value increased +0.6% and the worst performer, relatively speaking, was the Dow 30, which depreciated -0.1%. Principal index the S&P500 appreciated 0.5% to 2,907 points and has reached the highest point since 2018 October. The index needs only 1.3% growth to reach an all-time high. Despite economic data indicating further slow-down of economic activity, significant expectations are put on China's economic stimulation, and central banks will also not allow stock markets to significantly depreciate. However, most important is that it only sustains expectations, and if they fail to do so, and they shift to negative, a significant correction is possible, therefore, holders of long positions should remain especially tactical.
Significant attention was directed towards the data coming from China. It was announced that in March there were 427 billion USD in new loans issued, significantly more than market expectations, and the best March result in history. Traders are widely speculating that China's government is significantly increasing loan volumes to maintain the economic activity level, which is similar to what happened in 2016. However, the main problem is that the loans are growing disproportionally faster than economic results, which in the long term, should lead to depreciation of Yuan. Nevertheless, during the last decade, this economic stimulation measure was effective and had a significant positive influence on global economic growth, which encourages investors to take bigger risks. Main China's stock index Shanghai Composite dropped -2.0% despite positive news.
In U.S. bond market difference between 2 and 10-year bonds remained stable at 0.15% level. Yield curve moved downwards during the whole week, although on Friday it significantly appreciated together with the whole market's optimism due to China. It is likely, that during the few upcoming weeks, it will reach the first resistance and then investors will better understand if it is only short-term yield correction or a bigger change.
Commodities have further demonstrated resistance to negative global tendencies and have reflected China's expectations. WTI type oil price appreciated 1.1% to 63.8 USD/barrel. U.S. oil extraction continued growth and according to last week's data, the extraction rate was 12.2 million barrels per day. While U.S. production increases, Saudi Arabia decreases its production and Russia discusses plans to join. In the metals market, copper price increased 1.8%; aluminium decreased -1.0% and iron ore further appreciated from 91 to 94 USD/T.
Among different sectors, the best performer was the financial sector, which appreciated 1.3%, mainly due to main banks, which exceeded financial expectations. In addition, growth was demonstrated by services and technology companies, which appreciated 1.1% and 0.9% accordingly. Worst results were demonstrated by the healthcare sector, which depreciated -2.7% and commodity sector, which lost -0.4%.
Last week significant attention was directed to Walt Disney. It is one of the most well-known media and entertainment companies in the world, which has not only large animated cartoons and live-action films, but also a wide range of TV channel networks, such as ESPN, National Geographic, and ABC. The company also manages theme parks in various countries around the globe, which are successful and generate profits for the company's shareholders. It is important to note that Walt Disney has recently acquired Twenty-First Century Fox, whose video content will be very useful for the development of new business lines.
Last week, it was announced that the Walt Disney company, starting November is to launch a video streaming service, named Disney+. The company will upload its owned content to the platform and the viewers will able to view it on demand. This platform is expected to be the main competitor for Netflix, therefore on Friday Netflix share price has dropped -4.5%. Disney+ will cost 7.99 USD per month, which is less than Netflix's cheapest alternative.
After the announcement of the new product, Walt Disney share price increased by 11.5% to an all-time high, and in the last 12 months, the stock price has risen by 30%.
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