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Weekly market review

Week ending 6 May 2016


Stocks

Mixed readings on economic growth and weakening corporate profits dampened the appeal of risky assets for another week and weighed on equities. The UK and US stock markets ended the week down 0.9% and 0.3% respectively, with the latter trading near its lowest level since early April. The Eurostoxx 600 fell 2.7%, with losses centred in the energy sector, the Chinese Shanghai Index ended down 0.9% and the Japan TOPIX dropped 3.2% in its longest losing streak since January.

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Fixed Income

The UK 10 year government bond yield fell last week, its largest one-week fall since January, as economists expect contradictions in industrial and manufacturing output figures to be released this week. The US 10-Year Treasury yield fell to 1.78% in a week marked by weaker employment data. So far the recent rise in US high yield defaults has been contained almost entirely to the energy, metals and mining sectors. The German 10-Year yield fell to 0.14%, as the strength of the euro led to the European Central Bank being more cautious on inflation.

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Currencies

The British pound lost 1.3% against the dollar as the manufacturing Purchasing Managers’ Index (an indicator of the economic health of the manufacturing sector) fell, signalling contraction for the first time since 2013. The yen appreciated further, closing at ¥107.13, even though Bank of Japan Governor Kuroda reiterated a willingness to stimulate the economy.



Commodities

West Texas Intermediate crude oil suffered its first weekly decline in a month. Higher US crude oil inventories and OPEC (Organisation of Petroleum Exporting Countries – a cartel that manages oil supply to set the price of oil on the world market) production were offset by concerns that oil companies in Canada may be forced to further cut production due to the wildfires, which are causing widespread devastation.

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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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