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Weekly market review

Week ending 19 August 2016


The US stock market finished with a modest decline after touching fresh all-time highs early in the week. Cautious Federal Reserve (Fed) policymaker remarks midweek - to the effect that more data is needed to gauge underlying economic momentum - failed to lift the market. In Europe, stocks faltered with the Eurostoxx 600 declining -1.7% and the UK stock market closing down for the week as traders pondered future US interest rate changes ahead of an important central bank gathering in the US next week.

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Fixed income

Global sovereign yields were broadly higher off the back of the Federal Open Market Committee (FOMC – branch of Federal Reserve that determines the direction of monetary policy) meeting minutes, with US 10-Year Treasury bond yields settling at 1.6%. The UK 10 year government bond yield hit an all-time low of 0.5% on Monday, subsequently making a slight recovery to close up for the week as higher retail sales limited the fall in bond yields. As they finished with gains, yields in Germany and Japan backed off intra-week highs following receded market expectations of a near-term interest rate hike.

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The US Dollar Index fell to its weakest since June as officials continue to send mixed signals over interest rate policy. The euro bounced back to post-Brexit highs following strong readings in Eurozone inflation and economic sentiment. The pound strengthened to a 2-week high as data shows economic resilience after the Brexit vote, although it remains at a 3-year low despite this surge.


Speculation that OPEC (Organisation of Petroleum Exporting Countries – intergovernmental organization of 14 oil-exporting nations that unifies its members’ petroleum policies) is on course to agree to an oil production freeze helped West Texas Intermediate’s (WTI) position. Government data indicated declining stockpiles of US crude and gasoline further fuelled investor optimism. WTI crude oil had its longest advance in more than a year, rising 9%. Brent oil rose above $50 a barrel for the first time since July.

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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.