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Weekly market review

Week ending 27 May 2016


Stocks

Stocks recorded steep advances last week as global risk appetites increased. The UK stock market closed up, with mining stocks recovering to help the index close up 1.8%. Surging US home sales, rising oil prices and increasing investor optimism that the global economy can withstand Federal Reserve interest rate hikes, helped the US stock market reach a two-week high. The Japanese TOPIX index rose 0.5%, a one-month high, helped by hints that additional monetary policy stimulus from the central bank may be on the horizon.

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Fixed Income

The US 10-year treasury yield remained flat at 1.84% on the back of weak core durable goods orders, reflecting the market’s lower expectations of a Fed rate hike in June. The 10-Year German bund rallied mid-week following an agreement between Greece and its international creditors regarding the former’s debt provisions. The UK 10-year government bond yield fell slightly, closing the week at 1.47%.

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Currencies

The US dollar index gave up early-week gains to finish nearly flat, while the British pound strengthened to $1.46 after Bank of England (BoE) governor Mark Carney reaffirmed that the BoE will stand by its effort to bring inflation back to target, regardless of the 'Brexit' referendum’s outcome.



Commodities

Declining oil supplies in the US, various non-OPEC countries and Nigeria have helped drive up prices substantially from their February lows. (OPEC stands for the Organisation of the Petroleum Exporting Countries, an intergovernmental organisation of 13 oil-exporting nations.) The trend continued last week, when West Texas Intermediate crude oil rose to $49.33/barrel, driven by inventory and production declines.

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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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