Q2 2019 Quarterly Investment Review

July 18, 2019

Most major stock markets extended their 2019 rally into April before tumbling in May.

After volatility in the first half of the year, June brought a new record high for the S&P 500 Index. Kevin Barr, Head of our Investment Management Unit, provides an overview of what's been happening in the global financial markets, and our perspective on them. 

Q2 2019 Investment review

Transcript

Hi,

I'm Kevin Barr, Head of SEI's Investment Management Unit. Over the next few minutes I will provide an overview of the global financial markets and our perspective on them.

CHART 1: Equity Markets Continue Climbing

Most major stock markets extended their 2019 rally into April before tumbling in May. June brought varying degrees of recovery, with the S&P 500 Index setting a new record high as U.S. stocks climbed. Global equity markets, represented by the MSCI ACWI Index, followed closely.

Most of the action was driven by the trade war with China. Trade talks deteriorated at the beginning of May, but were revived in late June as both sides agreed to return to the negotiating table.

CHART 2: Trade’s Uneven Impact on the U.S. and China

Judging by the markets, the setbacks and eventual progress on trade negotiations whipsawed China more sharply than it did the U.S.

We can see the hit that China took in May compared to the U.S., along with the notably larger rebound in June.

CHART 3: Country-Level Performance

Country-level performance was skewed favorably over the course of the full second quarter. While while the U.S. fared well, China was one of the few exceptions. Other emerging markets performed better than China, producing some of the quarter’s largest gains.

But China’s outsized representation in the MSCI Emerging Markets Index meant that emerging-market equities, as a group, lagged developed markets.

There’s concern that the bull market in equities is on its last legs, the victim of a slowing global economy, the lagged impact of last year’s interest-rate increases, and global trade concerns.

While the U.S. economy is hardly firing on all cylinders, we think there’s still life in the global economic expansion. We expect corporate profits to continue growing, pushing stock markets to higher levels in the months ahead.

We don’t yet see the economic imbalances or outsized equity-market valuations that normally bring on recessions and contractions in stock prices. Accordingly, we see no reason for undue concern.

On behalf of everyone at SEI, thank you, as always for your trust and confidence.

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Index Descriptions 
All indexes are quoted in gross performance unless otherwise indicated. 

MSCI ACWI Index: The MSCI ACWI Index  is a market capitalization weighted index composed of over 2,000 companies, and is representative of the market structure of 46 developed and emerging market countries in North and South America, Europe, Africa, and the Pacific Rim. The index is calculated with net dividends reinvested in U.S. dollars.

S&P 500 Index: The S&P 500 Index is an unmanaged, market-capitalization weighted index that consists of the 500 largest publicly traded U.S. companies and is considered representative of the broad U.S. stock market

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