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Weekly market review

Week ending 5th February 2016


Stocks

UK and US equity prices fell, as communication from both the Federal Reserve and the Bank of England indicated a more cautious outlook. The FTSE 100 and S&P 500 dropped 3.45% and 3.0% respectively with the US market in particular adding to its worst start to a year since 2009. Japan’s stock market, the TOPIX index, fell 4.4%, and China’s Shanghai Index grew 1.0%.

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Fixed Income

Central bank cautiousness also negatively affected global bond markets, as the UK 10-year bond yield fell to 1.56%, the US 10-year bond yield fell to 1.85% and German 10-year bond yield fell to 0.29%. Japan’s 10-year yield also weakened further following last week’s sharp declines to 0.02% and remained in negative yield territory.

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Currencies

Globally, currencies strengthened against the US dollar with the euro closing at $1.11. The pound recovered and closed higher at $1.45 due to the cautious stance from the Bank of England - cautiousness which was partially motivated by weak UK wage growth and global market volatility. Following sharp prior-week losses, the Japanese Yen strengthened to ¥116.88 amid weak US data.



Commodities

West Texas Intermediate’s (the main benchmark for oil consumed in the US) rally from a multi-year low paused, as weaker Chinese data and diminished supply-cut expectations impacted prices. Despite crude oil stockpiles posting the highest levels since the 1930s, a weaker dollar and a modest US crude-oil production decline helped fuel a late week upturn, though West Texas Intermediate still closed down 8.1%.

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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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