The Dow Jones Industrial Average gained 98 points on Friday as the index reclaimed the 18,000 level. The Dow gained 294 points for the week, a +1.6% gain. The NASDAQ is once again nearing the 5000 level, up 109 points for the week – a +2.23% gain. The large-cap S&P 500 index rose +1.7% for the week, while the MidCap 400 and SmallCap Russell 2000 each tacked on a +0.7% gain. Canada’s TSX jumped +2.41%, its second straight weekly gain, to close at 15388.
West Texas intermediate crude oil jumped +4.52% for the week. Precious metals were mixed as gold gained almost half a percent to close at $1208.10, but silver dropped -1.58% to end the week at $16.49 an ounce.
Around the world, Emerging Markets leapt +4% last week and Developed International gained +1.64%. In Europe, Germany’s DAX tacked on another +3.4% for the week to reach new all-time high. Not to be left behind, France’s CAC 40 gained +3.28%, and the London FTSE also gained +3.75%. Asian markets have been particularly strong of late – China’s Shanghai Composite has risen dramatically, up over +25% in just the last 5 weeks.
In US economic news, the service sector remained resilient as the Institute for Supply Management (ISM) nonmanufacturing index declined to 56.5 in March. The reading was lower than the 56.7 expected, but still strong. Consumer confidence surged to a near eight year high in Bloomberg’s Consumer Comfort index for the April 5 week. Despite the dollar’s strength, export prices fell -0.4% in March, more than the downwardly revised -0.3% decline in February, and are -6.7% lower for the trailing year. Import prices fell -0.3% as expected, and are a very substantial -10.5% lower than year ago levels. Final March service-sector Purchasing Managers Index (PMI) was stronger at 59.2, up over 2 points since February. New orders, backlog orders and employment all increased in the PMI report.
US Job creation sank below even the most pessimistic forecasts, the Labor Department reported last Friday. Employers added just 126,000 jobs, half the 2014 average and the lowest in 16 months. The jobless rate remained at 5.5%, but the labor force participation rate dropped to 62.7%, one of the lowest readings in decades. Downward revisions for January and February totaled 69,000.
Fannie Mae reported that the share of survey respondents who stated that now is a good time to buy a home fell to 66% in March, while those saying that they’d buy if they moved fell to a survey low of 60%. Fannie attributed this to “lackluster income growth.”
Canadian employers added 28,700 jobs in March, better than forecast. The jobless-rate stayed at 6.8%. Canadian housing starts jumped 25% in March to an annual rate of 189,708 beating forecasts of 175,000. The rise was driven by multi-family housing units in urban areas.
Eurozone PMI slipped -0.1, but stayed at an 11-month high of 54.0 – still in expansion territory. The Services sector gave up -0.1 point to 54.2. Manufacturing production rose at the fastest pace since last May, according to Markit. The Eurozone Producer Prices Index (PPI) rose +0.5% in February, stronger than the +0.1% expected. It was the first monthly gain since September, leading some to hope that deflationary pressures are lessening. France’s final March PMI dropped -2 ticks to 51.5, while the services component declined -4 ticks to 52.4 – but both remained in expansion (>50) territory. German business optimism hit a 4-year high.
China’s consumer price index fell -0.5% in March for a year-over-year change of +1.4%. The reading is below the official target of +3% and suggests that the central bank will consider more economic stimulus. The expectation among Chinese investors of this forthcoming government stimulus has been identified as a primary cause of the recent explosion higher in China’s stock markets.
That explosion higher in the Chinese markets might look eerily familiar to US investors who lived through the Nasdaq Tech bubble of the late 1990’s: