Economic Data and Market Highlights
Equity markets continued to move upward as the third quarter begins to close out. The S&P 500 rose 64 basis points for the week. If flat on Monday, it will finish up 5.43% for the quarter and 21.55% year to date. Global markets as represented by the MSCI ACWI benchmark was up 1.92% for the week with a more modest 19.22% year-to-date.
Emerging markets advance 6.22% for the week and 17.60% year-to-date. India has overtaken China in the MSCI-All-Country World Index, one of the largest global benchmarks. This highlights India’s rising strength in global equity markets. India’s weight is now 2.33 percent versus China’s 2.06 percent. This makes India the sixth-largest weighting in the index. India’s stock market has reached new highs in recent months driven by strong GDP and influx of domestic investments while China has struggled with slowing economic growth and regulatory challenges. India’s IPO market and capital raises have helped the country as well as economic stability, innovation, and strong corporate earnings. In 2020, China made up 40% of the MSCI Emerging Markets Index and now has fallen to around 25% versus India rise to 20% from just below 7%. India has seen an inflow of $38 billion into domestic equities year to date. The MSCI AC World Index consist of 23 developed markets and 24 emerging markets across both large and small cap companies. Analysts predict the trend to continue as the Indian market outpaces the broader market boosted by continued strength in corporate earnings and government initiatives aimed at innovation and infrastructure development. Digital innovation is an increasing trend among Indian companies as well as economic reforms positioning itself as a global hub for investors. Some challenges for the country are high valuations, global-macro headwinds, and continued geopolitical risks. The move in index weight between the two countries marks a significant point in time for global investors.
Midweek, China provided significant stimulus into the economy with plans to issue roughly Two Trillion Yuan in sovereign bonds while its central bank cut rates by 50 basis points. Further, curbs implemented to curtail home ownership were lifted.
Meanwhile, economists are starting to suggest that the US economy is in a goldilocks state with rates coming down, and while unemployment has ticked up, its still 1.5 percentage points below its average since the 1950’s. Torsten Slok of Apollo pointed out while making the argument that weekly bankruptcies have continued to fall year to date as indicated in the chart below. He notes that consumers are still spending and lower rates should contribute to additional breathing room. While the Conference Board earlier this week, released its survey related to Consumer confidence which fell, Michigan’s Consumer Sentiment Survey surged above estimates to 70.1.
The Past Week’s notable US data points
The Past Week’s notable US data points 
The Upcoming Week’s notable US data points
Data Source: Blackrock, Bloomberg, Charles Schwab, CNBC, Goldman Sachs, J.P. Morgan, Morningstar, MarketWatch, Standard & Poor’s, and the Wall Street Journal.
Authors:
Jon Chesshire, Managing Director, Head of Research
Michael McNamara, Analyst