On a flat week, emerging markets continue to climb
In this week’s video update:
- The European Central Bank (ECB) proves that discretion is the better part of valor.
- U.S. equities earnings season begins as expected. Did markets hold steady?
- China hits GDP targets. Emerging markets continue to perform.
On this week’s update, Rob Cittadini, regional director, consultant relations, interviews Chief Investment Strategist Erik Ristuben to explain this year’s remarkable emerging markets performance.
Ristuben begins with a look at the ECB, which continues to stand pat on rate moves. ECB President Mario Draghi avoided any clarifying comments on when they might adjust rates. The market responded steadily, with the Stoxx 600® up about 1% on the news.
Early on in the earnings season
According to Ristuben, 90 companies on the S&P 500® have reported earnings so far, and 58 of those have met or beaten estimates. Ristuben saw that level of performance as the minimum required for U.S. equities to maintain their current high level of expense. This week, the S&P 500 was up about half of a percentage point.
GDP data from China
Lastly, Ristuben comments on the third-quarter GDP figures released this week from China. The nation’s stated GDP growth rate goal was between 6.5% and 6.7% and they hit that number spot on at 6.7%. Ristuben shared that there is some speculation on the accuracy of that data, but in general the numbers were received positively and were buoyed even further by China’s consumer spending number up 11% year over year.
Ristuben stated that those numbers from China, along with the fact that emerging markets started the year very cheaply, are likely what has driven the Russell Emerging Markets Index® up by more than 2% this week and by about 19% year to date. Russell Investments’ strategists believe there is even more upside for that market sector.