Some highlights of this past week’s news in business
- The Dow Jones rebounded from last Friday’s close to reach 21,080 points, ↑ 209.16 (1.00%). Microsoft (MSFT: $69.96) held the largest gain of ↑ 2.27 (3.35%) with the bulk of gains coming from the financials sector: Goldman Sachs (GS: $223.45) ↑ 6.06 (2.79%), Travellers Co. (TRV: $123.66) ↑ 2.83 (2.34%), and VISA (V: $94.65) ↑ 2.12 (2.29%). Investors kept an eye on stabilizing oil prices, the OPEC meeting, and President Trump’s first global visit.
- The Chicago Federal Reserve announced that their National Activity Index (CFNAI) reached .49, the highest level since November 2014 when it reached .50. The CFNAI describes the rate at which the economy is growing and any related inflationary pressure. It is made up of a weighted average of 85 monthly indicators of economic activity which include average weekly overtime, industrial production, and employment rates among others. It also serves as a complement to GDP growth.
- The Fed’s FOMC minutes were released on Wednesday, and while the Committee has agreed to keep constant the Federal Funds’ Rate, it has also hinted at an interest rate hike in the near future. Investors should increase their position in financial services’ companies including banks, insurance and brokerage houses since these institutions will benefit greatly from an interest rate hike. The overall message from the recent FOMC meeting was positive, demonstrating that the Committee has an overall bullish perspective on the economy.
Oil & Gas
- OPEC and non-OPEC member countries met on Thursday, May 25 to discuss extending their production cut agreement. OPEC countries are seeking higher oil prices to revitalize their oil-dependent economies. Global oil prices are down from their high of $143.95 nearly a decade ago in 2008 to $52.15 as of Friday’s close, a fall of -63.7%. At the conclusion of the meeting, OPEC member countries agreed to continue their cuts for an additional nine months until March 2018 so as to avoid concluding at the same time as the drop in seasonal demand. Both OPEC and non-OPEC member countries will meet again at the end of November 2017 to discuss future policies. The markets didn’t take well to this news as oil prices fell the most in three weeks on Thursday and closed out lower on Friday afternoon.
- While OPEC has made unprecedented progress in combatting the global oil glut, many analysts are concerned about the increase in U.S. shale oil production undermining OPEC’s efforts. If OPEC and non-OPEC member countries want to see their target of $60/barrel come into fruition, they’ll have to have a conversation with the United States.
Independent Business Blogger
Share Prices are listed with their respective Friday close values. Economic data is provided on a weekly change basis unless otherwise stated.