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Weekly market review

Week ending 13 May 2016


Stocks

It was a mixed week for stock markets. Despite a three-day rally due to US Dollar stabilisation and commodity strength, the US stock market fell to -0.4% due to disappointing company earnings releases. The Chinese stock market fell for the fourth week in a row. In contrast, in the euro area, despite softer-than-expected industrial production data, the Eurostoxx 600 ended the week up 1.1% and although bearish sentiment was expressed by the bank of England mid-week, with regards to a potential Brexit, the UK stock market still closed slightly up for the week.

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Fixed Income

The UK 10-year government bond fell slightly as Bank of England Governor Mark Carney warned that Brexit could lead to a recession. The US 10-Year Treasury yield fell to 1.7%, trading lower following stronger-than-expected demand. Following Japan’s extended market holiday last week, the Japanese 10-Year yield fell to -0.1%, while the German 10-Year Bund yield bounced off of monthly lows to close at 0.12%.

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Currencies

Both the British pound and euro sold off sharply to $1.44 and $1.13 respectively, driven by stronger US economic data, with the US dollar Index rose 0.8% on the back of stronger-than-expected retail sales. The Japanese yen continued to weaken, despite cautious comments from Bank of Japan’s Kuroda, as markets continue to dismiss the possibility of further short term intervention.



Commodities

Oil hit its highest level in more than six months despite investor concerns that Canada is moving towards restarting oil production, with shifting winds helping move fires away from oil-sand facilities. However, unable to hold onto early-week gains, West Texas Intermediate remained volatile and closed the week at $46.2/barrel.

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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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