Weekly market review
Week ending 29th January 2016
UK and US stock markets ended the week modestly higher (up 3.1% and 1.8% respectively) thanks in part to their positive reaction to the surprise move by Japan’s central bank to cut interest rates and take them into negative territory. Japan's own stock market, the TOPIX, rose 2.9% on the day of the announcement alone. In Asia, China’s Shanghai index was down 6.1% for the week.
Bond yields fell after cautious monetary policy announcements from both the US and Japanese central banks. The Japanese 10-year bond yield fell to 0.1%, while the US 10-year Treasury bond yield fell to 1.93%. European yields also fell.
Central banks also dominated currency moves. The US Dollar Index finished up 0.28% despite the Federal Reserve offering a cautious tone on the economy, while the Bank of Japan’s surprise rate cut sent the yen to a 5-week low against the US dollar. The pound has stabilised in the $1.42-1.43 range, as resilient economic growth figures put the brakes on its rapid fall.
Oil remained volatile this week after Saudi Arabia, the world’s biggest crude oil exporter, announced a potential production cut deal with Russia. US crude oil stockpiles expanded to record-levels after a third weekly increase, further contributing to the global oversupply. West Texas Intermediate crude oil continued to rally, rising 4.4%, though it is still down 9.2% this year.
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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