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Weekly market review

Week ending 17 June 2016


Stocks

Markets continue to remain focused on the outcome of next week’s EU referendum, with heightened levels of volatility observed globally. The UK stock market fell sharply, before a rally in metals companies and banks, helped it recover to close at just above the 6,000 mark. US market volatility spiked and the stock market ended the week down 1.1%, with the Federal Reserve (Fed) announcing that interest rates would not grow due to an uncertain jobs market and the possibility of a ‘Brexit.’

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Fixed Income

UK 10-year government bond yields suffered last week as Brexit fears led to a surge in demand for safe-haven assets. On Wednesday, US 10-year Treasury bond yields closed at their lowest level in over three years, as investors speculated that rates will remain lower for longer. Also facing further downward pressure, 15-year sovereign yields in Japan nearly ended their first full trading week below zero.

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Currencies

The US dollar traded higher to start the week, but a marginally cautious Fed subsequently weighed the currency down due to Brexit fears impacting their interest rate decision. The pound was also detrimentally impacted by a potential Brexit at the start of the week, although it recovered well after an increase in support for the Remain campaign, closing the week up against the US dollar and euro as a result. The Japanese yen hit a fresh 22-month high of ¥104.23, as the Bank of Japan kept its policy unchanged.



Commodities

West Texas Intermediate crude oil suffered its biggest weekly drop in more than two months, closing at $47.98/barrel. Risks remain that oil prices will fall further if oil production in Canada, Libya or Nigeria increases once more.

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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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