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Weekly market review

Week ending 2 September 2016


Equities

The US stock market rose despite a slightly weaker than expected jobs report, which investors saw as lowering the likelihood of a September rate hike. This led to a climb in the UK stock market, which hit a two-week high last week, as well as a jump in the Eurostoxx 600 and Japanese TOPIX indices of 2% and 4.1% respectively.

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Fixed income

UK government bond yields rose last week after positive sales, economic and unemployment data, while US 10-year treasury bond yields closed slightly up at 1.6% despite mixed economic data. Investors continue to reassess whether economic and financial conditions are strong enough to prompt interest rate hikes. The German 10-Year bund yield remained relatively flat and continues to hover below 0% since mid-July. On the other hand, Japanese 10-Year Treasury yields continue to rise as uncertainty over the Bank of Japan’s policy decisions fuelled heavy selling.

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Currencies

The pound made strong gains last week, trading above $1.33 for the first time in four weeks, after the British manufacturing sector staged an unexpected rebound from the Brexit shock. It gained further on the US dollar after a negative US manufacturing data report. The Japanese yen depreciated against the dollar to ¥103.9, and the Euro fell to $1.12.



Commodities

West Texas Intermediate Crude Oil traded down to $44.4/barrel, following lower expectations for a production cap at this month’s International Energy Forum. Even if oil production is capped, market participants believe stock oversupply will continue to weigh down prices, with Organisation of Petroleum Exporting Countries (Intergovernmental organisation of 14 oil-exporting developing nations that unifies the petroleum policies of its Member countries) members pumping at record levels and the US logging two consecutive weeks of record oil imports.

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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.