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Weekly market review

Week ending 5 August 2016


Equities

Equities advanced as investors eyed Friday’s impressive US employment report, which beat expectations. The US stock market (which gained 0.5% on the week) continues to hover near record levels, supported by stronger-than-expected economic data and recent months’ crude oil rebound. The UK stock market reached a new 2016 high and its highest level in over a year after the post-Brexit stimulus package announcement was larger than expected. European stocks ended the week flat, despite posting strong gains following the Bank of England’s (BoE) first interest rate cut since 2009.

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Fixed income

Treasuries sold off on the week, driven by a strong US employment report, while, in contrast, the BoE’s easing of monetary policy pushed UK interest rates lower (with the 10-Year government bond yield falling to a record low of 0.7%). Japan mirrored the US trend, with the 10-Year bond yield creeping towards positive territory, a sign that investors consider it increasingly unlikely the Bank of Japan will cut rates deeper into negative territory. High yield continues to reflect optimism, with US and global indices holding onto their double-digit year-to-date gains.

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Currencies

The Bank of England’s interest rate cut weighed on the British pound, although it was only slightly down for the week versus the US dollar, whose index rose, capped by Friday’s strong US jobs report. In Japan, pressure on government bonds coincided with the yen’s rise to near 3-year highs.



Commodities

Volatility continued in the oil market this week, with West Texas Intermediate crude oil bouncing off a three-month low of under $40 per barrel, finishing the week about flat, and buffeted by the strong jobs report and oil inventory data. Gold prices trimmed their impressive year-to-date gains (26.7% in 2016) slightly, falling 1.0% on the week.

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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.