Weekly market review
Week ending 10 June 2016
US equities rallied early in the week, just missing a new record all-time high, before giving back early week gains and ending the week flat, as global growth concerns rose amongst investors. Lingering economic and geopolitical concerns pulled the UK stock market and Eurostoxx 600 indices 2.4% and 2.5% lower respectively, while the Japanese TOPIX index fell 0.5%.
Sovereign debt yields fell around the world. The 10-Year US Treasury yield, aided by strong auction demand, fell this past week to 1.64%, hovering near the current year's lows. Core European yields also moved lower, including the UK 10-year government bond yield and the Germany 10-Year Bund, the latter hitting a fresh all-time low near zero, as the European Central Bank kicked off its corporate bond-buying program. Moves in Japanese government bonds were no different, as 5-, 7-, and 10-year yield rates touched record lows as well.
In a relatively quiet week for economic data releases, the US dollar stabilised as Federal Reserve Chair Yellen struck a fairly balanced tone on the economic outlook and trajectory for increases in the Federal Funds rate. Recent strength in energy prices also helped fuel a broad rally in commodity currencies. The British pound continued to struggle with uncertainty over the imminent EU referendum, as it fell against the US dollar, euro and yen.
Oil prices surged above $50 early in the week, before settling at $49.07/barrel, as a result of stabilisation in the US dollar. Notably, oil prices have rallied over 60% from their lows this year on speculation over slowing production and recurring supply disruptions.
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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