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Weekly market review

Week ending 22nd January 2016


Stocks

The US stock market posted its first weekly gain in a month, finishing up 1.4%. However, the CBOE Volatility Index (a barometer of investor sentiment, which measures expectations of volatility over the next 30 days) briefly spiked again for the second straight week and has remained above its long-term average. Japan’s Nikkei 225 index notched its largest daily gain since early September on Friday, but closed the week down 1%.

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Fixed Income

US Treasury yields increased late in the week as risky assets' demand rose, and the US 10-year Treasury yield ended the week at 2.05%, but lower than when the Federal Reserve increased interest rates in December. Returns on European bonds fell after the European Central Bank (ECB) signalled that more quantitative easing (QE) may be in store in the coming months. The German 10-Year bond yield is now at an 8-month low.

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Currencies

The US Dollar index was up 0.81% and the euro fell to $1.08, following the ECB’s hints at plans to stimulate spending within the economy. The Japanese Yen also decreased as investors speculated on further QE at the Bank of Japan’s upcoming policy meeting. In emerging markets, the Brazilian Real fell as the Bank of Brazil surprisingly elected to keep its key interest rate unchanged.



Commodities

The energy sector continues to suffer after speculation that Iranian oil sales will extend the issue of global oil oversupply, as well as continued concerns about the volatility in Chinese markets. However, due to a late week surge, West Texas Intermediate crude oil (the main benchmark for oil consumed in the US) rose to $32.19, its biggest rally since August.

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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.


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