This week in the stock markets

  • There was a steep dive in the markets Tuesday after weeks of negotiations between two eurosceptic parties in Italy failed to produce a new coalition government.
  • Oil prices surged this week after Saudi Arabia and other Organization of Petroleum Exporting Countries (OPEC) stated they would aim to stick to a global pact on cutting oil supplies through the end of 2018.
  • A sharp decline in many major markets on Thursday may have been caused by President Trump announcing tariffs on steel and aluminum imports from the European Union, Canada, and Mexico.

Italian political drama roils the markets

Weeks of prolonged negotiations between two Italian anti-establishment groups failed to produce a new Italian coalition government on Tuesday. The country has been without a government since early March when elections resulted in a hung parliament. Financial markets appear concerned that new elections could result in Italy’s potential exit from the European Union (an Italian version of Brexit). Global investors have been watching with some anxiety.

This may have been the cause of a dip in the markets early in the week, but a swift rebound took place on Wednesday as investor anxiety appeared to subside. For MoneyLion Plus investors, this is a great example of the importance of staying globally diversified and not jumping ship when international political issues arise. Remember, the market has always recovered and gained new ground in the long run.

OPEC pact may have spurred a rebound

OPEC announced Wednesday that they would strive to continue a global pact, which would manage oil supplies through the end of 2018. The announcement helped to spur a market rebound within the energy sector. On one hand this could prevent you from seeing super-low gas prices, but on the other, the pact may prevent oil prices from being driven up due to a fear of oil shortages.

By closely managing oil inventories, producers believe they are better able to control oil prices, which could be good news for your MoneyLion Plus investment portfolios. As of June 1, 2018, 6% of the Vanguard Total Stock Market ETF (VTI), in which you are invested with MoneyLion Plus, is allocated to the oil and gas sector. #Winning.

Explaining the ups and downs of DJIA this week

After panic about Italy’s geopolitical uncertainty subsided, the Dow Jones Industrial Average (DJIA) rose mid-week, only to fall sharply on Thursday along with the other major indexes. The decline may have been caused by Trump's announcement that tariffs would be enacted on steel and aluminum imports from the European Union, Canada, and Mexico. The tariffs took effect at midnight on Thursday. Analysts widely predict that these countries will impose tariffs on American imports as a retaliatory measure.

The DJIA is made up of 30 large, publicly owned companies that are based in the United States. These companies are often referred to as blue chip stocks, which means they are large, established and sound companies that have been operating for many years. Boeing, Chevron and Home Depot (which are all holdings within your Vanguard Total Stock Market (ETF) were the leaders among blue chips stocks mid week, which helped to push the index up.

Focus on the big picture

The MoneyLion Plus investment strategy is made for the longer term and designed to help weather this type of short-term volatility. As you may note from reading our weekly market updates, the markets are very sensitive to political and economic news. Although we recommend that you stay informed, we also recommend that you try to focus on the big picture.

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