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Weekly market review

Week ending 3 June 2016


Stocks

Major global stock markets lost ground in choppy trading following several important data releases. The US stock market ended the week flat as a disappointing jobs report—the worst in six years—cancelled out the effect of strong manufacturing data. The US jobs report figures also had a detrimental impact on the UK stock market as the FTSE 100 index closed at 6200. The Eurostoxx 600 tumbled 2.3% following the European Central Bank’s (ECB) move to stand pat on interest rates. Japan’s TOPIX index fell 0.9% after prime minister Shinzo Abe held back a widely-expected fiscal policy stimulus, vowing to take “bold” economic steps in the fall.

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Fixed Income

The US 10-year treasury yield dropped sharply after the aforementioned US jobs report, pushing toward year-to-date lows. As anticipation of ‘Brexit’ also increased, investors flocked to bonds as safe havens, drastically decreasing UK and German 10-year bond yields too, while other Eurozone yields also moved lower as the ECB left policy unchanged.

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Currencies

The US dollar index retreated 1.4%, with most of the action coming on the heels of the weak jobs report. The British pound fell 0.8% as negative Brexit polling dominated price moves, while Euro area data in-line with consensus and the ECB’s status-quo decision on interest rate policy pushed the euro higher against the US dollar. The Japanese yen gained 3% as Shinzo Abe officially delayed an increase in the consumption tax by 30 months, crimping stimulus expectations.



Commodities

Oil edged lower as OPEC (Organisation of the Petroleum Exporting Countries, an intergovernmental organisation which aims for global oil price and oil market stability) members were said to fail yet again in their efforts to reach a new oil output cap agreement at a meeting in Vienna. West Texas Intermediate crude oil fell 1.4% percent, although still ended the month of May up 6.9%.

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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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