Market Update

The Economy

• Better economic data and the European Union’s announcement of plans to help Greece tackle its growing debt issues helped drive positive global investor sentiment.
• In the UK, loans for first-time home buyers rose to its highest level in two years.
• The European Union announced it would implement “determined and coordinated action” to assist Greece with its financial difficulties, but there were no firm details given.
• Gross domestic product for the 16-nation euro zone rose 0.1%, below forecasts of 0.3%.
• The U.S. Senate announced a job creation bill aimed at reducing the continued high unemployment rate.
• In the U.S., retail sales for January grew by 0.5%, beating estimates of 0.3%.
• U.S. initial jobless claims and continuing claims both fell more than anticipated.
• U.S. business inventories fell unexpectedly as consumer demand increased.
• Snowstorms shut down much of the U.S.’s East Coast for the week. While this boosted business for airport hotels and snow-related businesses, it is likely to hurt February’s employment numbers due to a slowdown in hiring for transportation and construction-related positions.
• China announced it is requiring banks to increase their reserve requirements, which takes effect February 25.

Stocks

• Global markets began with a rough start but improved throughout the week as better economic news prevailed.
• In the U.S., small caps outperformed their large-cap brethren, and growth stocks outperformed their value counterparts. Consumer Staples did best, while Financials lagged.
• In the UK, equity markets bounced back somewhat; consumer Staples, Healthcare and Materials led the market, while Information Technology, Telecommunications and Financials lagged.
• In Europe ex-UK, Consumer Staples, Energy and Healthcare performed best while Information Technology, Industrials and Consumer Services lagged.
• Oil prices rose on a weaker U.S. dollar and the snowstorms that have hit the Mid-Atlantic States and the East Coast of the U.S. 

Bonds

• Global bond markets fell on mostly positive economic news and a cautious outlook regarding government bonds.
• Bond investors were skittish due to fears that the U.S. Federal Reserve will raise interest rates and increased concerns for the potential for default for other peripheral European countries such as Portugal and Spain.
• Government bonds, as well as riskier high-yield and corporate bonds, fell for the week.
• Emerging-market debt (also perceived to be riskier) led the broader bond markets.

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