Weekly Market Recap

Week ended February 21

Market-moving news

Coronavirus concerns

With the coronavirus outbreak top of mind, major U.S. stock indexes felt the pressure. Although the S&P 500 and NASDAQ both hit record highs Wednesday, they were down more than 1% for the week, as was the Dow.

Golden age

Gold climbed to more than $1,600 per ounce, reaching its highest level in seven years. The recent gain is attributed in part to investors seeking more safe-haven assets as concerns over the coronavirus and the direction of global growth continue to mount.

Fed minutes

In the minutes from its January meeting, the U.S. Federal Reserve indicated it’s likely to keep interest rates unchanged, expressing confidence in the U.S. economy. Fed officials noted they’re also remaining watchful of other developments—including the coronavirus and trade uncertainty—and how they may affect the economic outlook.

Crude awakening

U.S. crude oil prices ticked upward, reaching almost $54 per barrel Thursday for the first time in nearly a month. News of a smaller increase in oil supplies and falling gas inventories, based on figures from the U.S. Energy Information Administration, contributed to the price increase.

Dollar days

The U.S. dollar rallied against the euro, Japanese yen, and Australian dollar, reflecting the U.S. economy’s strength amid ongoing uncertainty. On Tuesday, the euro experienced its biggest drop in 3 years against the greenback. The yen dropped to a 10-month low Thursday, and the Australian dollar plummeted to an 11-year low as of Friday.

Bruised Apple

Stocks closed lower Tuesday following Apple’s announcement that it wouldn’t meet its projected quarterly revenue. The tech giant said the impact of the coronavirus has limited iPhone production and decreased demand for its products in China.

Japan economic worries

Japan could be on the verge of a recession as it faces challenges related to the effects of the coronavirus and a slowing economy. The world’s third-largest economy shrank at an annual rate of 6.3% during the fourth quarter, marking its biggest contraction in five years.

House work

U.S. building permits, considered a gauge of future home construction, rose to an almost 13-year high, according to a report released by the U.S. Census Bureau. The number of building permits grew 9.2% in January, exceeding expectations and marking the highest level since March 2007.

The week ahead: February 24-28

Monday

No major reports scheduled

Tuesday

S&P/Case-Shiller 20-City Composite Home Price Index
Consumer Confidence Index, The Conference Board

Wednesday

New home sales, U.S. Census Bureau

Thursday

Fourth-quarter GDP, second estimate, U.S. Bureau of Economic Analysis
Durable goods orders, U.S. Census Bureau

Friday

University of Michigan Index of Consumer Sentiment
Personal income and consumer spending, U.S. Bureau of Economic Analysis

Unless otherwise noted, all data is from FactSet.

The data provided is for informational purposes only and is not an endorsement of any security, mutual fund, sector, or index. This does not illustrate the performance of any John Hancock fund. The information contained here is not guaranteed as to accuracy or completeness. All economic and performance information is historical and does not guarantee future results.

The Dow Jones Industrial Average is a price-weighted index comprising 30 widely traded blue chip U.S. common stocks. The NASDAQ Composite Index is a market-value-weighted index of all common stocks listed on the NASDAQ stock exchange. The S&P 500 Index tracks the performance of 500 of the largest publicly traded companies in the United States. The MSCI Europe, Australasia, and Far East (EAFE) Index tracks the performance of publicly traded large- and mid-cap stocks of companies in those regions. The Cboe Volatility Index (VIX) shows the market’s expectation of 30-day volatility and is constructed using the implied volatilities of a wide range of S&P 500 Index options. Weekly and year-to-date figures for the VIX show percentage changes, not investment returns. It is not possible to invest directly in an index. The Russell 2000 Index tracks the performance of approximately 2,000 publicly traded small-cap companies in the United States.

The Treasury yield curve is derived from available U.S. Treasury securities trading in the market and is provided directly by the U.S. Federal Reserve. The spread measures the difference in yield between two government securities. A normal (positive) yield curve occurs when longer-term rates are higher than shorter-term rates. The opposite holds true for an inverted yield curve. Year-to-date changes in U.S. Treasury bond yields are shown in basis points (BPS). One hundred basis points equals one percent.

Oil prices are represented by West Texas Intermediate (WTI) crude oil.

The G20 countries comprise a mix of the world’s largest advanced and emerging economies, representing about two-thirds of the world’s population, 85% of global gross domestic product, and over 75% of global trade.

Investment returns

Equities

U.S. equity size and style total returns (%) as of 2/21/20

1 week YTD

1 week
-0.7	-1.1	-1.5	Large
-0.5	-0.8	-1.3	Mid
-0.4	-0.5	-0.7	Small
Value	Core	Growth

YTD
0.7	3.9	6.9	Large
1.4	2.8	5.0	Mid
-2.4	0.7	3.8	Small
Value	Core	Growth

Index/market total returns as of 2/21/20 (%)

Close Week YTD

	Close	Week	YTD
Dow Jones Industrial Average	28,992.4	-1.4	1.9
NASDAQ Composite Index	9,576.6	-1.6	6.9
S&P 500 Index	3,337.8	-1.2	3.6
MSCI EAFE Index	2,002.9	-1.2	-1.5
Cboe Volatility Index	17.1	24.8	23.9

International/developed (%)

1 week YTD

	1 week	YTD
EAFE	-1.2	-1.5
Europe	-0.5	-0.6
France	-0.5	-1.6
Germany	-1.0	-1.1
Italy	-0.4	1.3
Japan	-3.1	-4.4
Spain	-0.7	0.7
Switzerland	0.2	3.5
U.K.	-0.4	-3.7

Emerging markets (%)

1 week YTD

	1 week	YTD
EM	-2.0	-2.6
Brazil	-2.4	-9.8
China	-1.2	0.5
India	-0.6	0.8
Indonesia	-0.3	-4.0
Korea	-5.6	-3.7
Mexico	-2.7	3.0
Russia	-0.3	-3.0
Taiwan	-2.9	-3.5

S&P 500 sectors (%)

1 week YTD

	1 week	YTD
S&P 500 Index	-1.2	3.6
Communication services	-1.2	4.4
Consumer discretionary	-1.1	4.7
Consumer staples	-0.1	3.0
Energy	-0.9	-10.2
Financials	-1.2	0.0
Healthcare	-0.5	1.5
Industrials	-1.2	2.6
Information tech	-2.5	8.5
Materials	-0.2	-1.7
Real estate	0.1	8.3
Utilities	-0.1	8.7

Fixed income, currencies, and commodities

U.S. fixed-income style total returns (%) as of 2/21/20

1 week YTD

1 week
0.1	0.4	2.3	High
0.2	0.3	1.0	Med	QUALITY
0.1	0.1	0.5	Low
Ltd	Int	Long
INTEREST-RATE SENSITIVITY

YTD
0.4	1.5	8.8	High
0.7	1.5	5.4	Med	QUALITY
0.7	1.2	4.9	Low
Ltd	Int	Long
INTEREST-RATE SENSITIVITY

U.S. Treasury bond yields as of 2/21/20 (%)

END OF WEEK PRIOR YEAR END YTD CHANGE (BPS)

	END OF WEEK	PRIOR YEAR END	YTD CHANGE (BPS)
2 Yr	1.35	1.58	-23
10 Yr	1.47	1.92	-45
30 Yr	1.91	2.39	-48
2-10 spread	0.12	0.34	-22
10-30 spread	0.44	0.47	-3

U.S. bond sector total returns (%)

1 week YTD

	1 week	YTD
Aggregate	0.6	2.5
Bank loans	0.0	0.1
Convertible	1.0	8.0
Corporate	0.6	3.0
High yield	0.1	1.2
MBS	0.2	1.0
Municipal	0.6	2.3
Preferreds	-0.5	1.0
TIPS	0.6	2.4
Treasury	0.8	2.9

Global bond total returns (%)

1 week YTD

	1 week	YTD
EM Local	-0.8	-1.9
EMD USD	0.5	2.7
Global Agg	0.1	0.6
Global Agg Ex-U.S.	-0.1	-0.6
Multiverse	0.1	0.5

Commodities (%)

1 week YTD

	1 week	YTD
BBG Com Ind	1.2	-5.5
Oil (WTI)	1.7	-12.6
Gold	4.0	8.1

Currencies (USD) (%)

1 week YTD

	1 week	YTD
EM FX	-1.0	-2.7
AUD	-1.3	-5.7
CAD	0.2	-1.9
CHF	0.3	-1.0
EUR	0.1	-3.3
GBP	-0.4	-2.2
JPY	-1.7	-2.7

U.S. economy

GDP

Jobs

Inflation

Ex-U.S.

Regions/countries

	GDP Growth (%) annualized	Inflation Rate (%) CPI	Unemployment Rate (%)	10-Year Government Bond (%)	Sovereign Credit Rating
Eurozone	0.9	1.4	7.4	_	_
China	6.0	5.4	3.6	2.91	A+
Germany	0.4	1.7	3.2	-0.43	AAA
Japan	-0.4	0.7	2.2	-0.06	A+
U.K.	1.1	1.8	3.8	0.57	AA

GDP Growth (%) annualized
Eurozone	0.9
China	6.0
Germany	0.4
Japan	-0.4
U.K.	1.1

Inflation Rate (%) CPI
Eurozone	1.4
China	5.4
Germany	1.7
Japan	0.7
U.K.	1.8

Unemployment Rate (%)
Eurozone	7.4
China	3.6
Germany	3.2
Japan	2.2
U.K.	3.8

10-Year Government Bond (%)
Eurozone	_
China	2.91
Germany	-0.43
Japan	-0.06
U.K.	0.57

Sovereign Credit Rating
Eurozone	_
China	A+
Germany	AAA
Japan	A+
U.K.	AA

Fund industry overview

Total net flows: open-end funds and ETFs ($B) as of 1/31/20

as tracked by ISS Market Intelligence SIMFUND

MONTH 12 Month ASSETS

	MONTH	12 Month	ASSETS
U.S. equity	-14.7	-77.1	9,096.5
Sector equity	4.2	-24.2	948.6
Allocation	-2.1	-38.0	1,310.0
International equity	20.2	16.5	3,326.6
Alternative	2.8	-5.4	191.3
Commodities	2.1	7.2	111.9
Taxable bond	60.6	441.7	4,469.1
Municipal bond	13.8	110.7	887.5
Total all long-term funds	86.0	399.8	20,353.9

Leading Morningstar fund categories by monthly net flows ($B) as of 1/31/20

	MONTH	12 Month	ASSETS
Intermediate Core Bond	16.2	136.8	1,020.0
Foreign Large Blend	13.4	55.5	1,230.1
Intermediate Core-Plus Bond	10.4	73.9	728.4
Large Blend	7.0	74.0	4,143.9
Diversified Emerging Mkts	6.3	13.8	579.6

Lagging Morningstar fund categories by monthly net flows ($B) as of 1/31/20

	MONTH	12 Month	ASSETS
Large Growth	-7.8	-79.3	1,900.2
Large Value	-4.7	-23.7	1,217.9
Small Blend	-3.5	-9.0	394.4
Mid-Cap Value	-2.0	-16.2	254.7
Mid-Cap Growth	-2.0	-10.3	371.9

Unless otherwise noted, all data is from FactSet.

Oil prices are represented by West Texas Intermediate (WTI) crude oil.

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February 18, 2020

Wealth creation and U.S. banks, revisited

Manulife Investment Management

While bank stocks lost some luster with investors in 2019 as interest rates fell and the yield curve flattened, the outlook has improved markedly in early 2020.

February 14, 2020

Behavioral alpha: the perils of the performance-chasing path

Keith H. Van Etten, CAIA, CFP, CIMA, Portfolio Consultant John Hancock Investment Management

In the third of a series of articles on how human behavior can affect investment decisions, we look at the reasons why we’re predisposed to chase performance, and techniques to avoid it.

February 04, 2020

Coronavirus: what does it mean for financial markets?

Frances Donald, Global Chief Economist and Global Head of Macroeconomic Strategy Manulife Investment Management

Sue Trinh, Senior Macro Strategist Manulife Investment Management

Financial markets are reeling as a result of the coronavirus outbreak. While the experience with Severe Acute Respiratory Syndrome (SARS) from some years back suggests calm would be restored soon, good sense and logic can remain in short supply in the meantime.

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