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Weekly market review

Week ending 18 November 2016


Equities

The UK stock market ended the week slightly down, experiencing a setback on Friday as the strength of the US dollar enticed investors away from commodities such as gold and lead to a large drop in the share prices of mining and energy companies. The post-election rally continued in US stocks as investors speculated that President-elect Trump’s administration will stimulate economic growth and drive inflation. The American Dow Jones and Russell 2000 indices both hit record highs and the US stock market rose 0.9%. The STOXX Europe 600 index ended the week up 0.6%, while a weaker yen helped deliver gains across key Asian markets, with the Japanese TOPIX index rising 3.6%.

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Fixed income

The US 10-Year Treasury yield made new highs for the year after Janet Yellen’s indication that there may be an interest rate rise in December, which also led to UK 10-year bond yields hitting their highest level since May last week. The Bank of Japan (BoJ) responded rapidly on Thursday by snapping up government bonds to curb interest rates and try to maintain control of bond yields.

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Currencies

It was another strong week for the US dollar against other major currencies, including the pound. The dollar index gained 2%, reaching a 13-year high. The rise has been driven by the increasing probability of in interest rate rise in the US in December. The Mexican peso, Brazilian real, and Russian ruble enjoyed relief rallies off of post-US election lows.



Commodities

West Texas Intermediate (WTI) crude oil rose 5.3% as Saudi Arabia signaled optimism ahead of a Doha OPEC (Organisation of Petroleum Exporting Countries – the intergovernmental organization of oil-exporting developing nations that coordinates and unifies the petroleum policies of its member countries) meeting to consider an oil production deal.

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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.