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Weekly market review

Week ending 29 July 2016


Equities

The UK stock market reached a 12-month high last week, before retreating on the back of Lloyd's announcement that they would cut 3,000 jobs. Other large UK companies fell amid more Brexit uncertainty and the market eventually closed slightly down for the week. The US stock market ended the week flat amid mixed corporate earnings and soft economic data. Disappointment from the Bank of Japan (BoJ), brought the TOPIX down 1.4% to end the week 0.4% lower.

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Fixed income

Global sovereign bond yields fell with Japan the notable exception, as the country’s central bank underwhelmed markets. The 10-Year US Treasury bond yield fell to 1.46% as a mildly aggressive Federal Reserve (Fed) tone wasn’t enough to counter a week of softer data, including disappointing second-quarter growth. The UK 10-Year government bond yield reached an all-time record low on Thursday ahead of a widely expected interest rate cut announcement from the Bank of England (BoE).

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Currencies

Two big central bank meetings dictated the tone for currencies this week. The Fed struck a somewhat more assertive tone in the build-up to their interest rate decision, but left rates on hold, leading to a decline in the US dollar index. The yen strengthened as the Bank of Japan announced an increase in its exchange-traded fund purchases to an annual 6 trillion yen. The BoE followed the Fed’s path, accepting that recent economic data had been a lot worse than expected. However, the pound remained in positive territory after news that several UK banks had rejected the BoE’s offer to buy their illiquid assets for cash to improve funding which slightly restored investor confidence.



Commodities

Crude oil prices fell sharply on the week, trading below $41/barrel for the first time since April. The decline comes on the heels of a cautious stock inventory report from the Department of Energy on Wednesday, which renewed concerns about oil stock oversupply.

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Source: Goldman Sachs Asset Management. Adapted by FundCalibre. This material is for information purposes only and does not in any way constitute financial advice.