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Weekly market review

Week ending 14 October 2016


Equities

The UK stock market ended the week down 0.4% amid concerns of the potential disruptions of Brexit and a weakening of the British Pound. As the US stock market digested mixed earnings and fresh signs of policymaker support for interest rate increases, it experienced its sharpest sell-off in 4 weeks, closing with a loss in a volatile week of trading.

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Fixed income

US 10-Year Treasury bond yields hit a four-month high on Tuesday following the release of Federal Reserve meeting minutes increasing expectations of an interest rate rise later this year. Volatility was also the word in the United Kingdom as UK government bond yields soared to the highest level since the Brexit vote, and bolstered the market’s inflation expectations to the highest level since 2014.

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Currencies

The US dollar surged off strong economic data over the past few weeks, a factor that may be seen as supportive of a potential December interest rate increase. The dollar gained against most major currency pairs, including the euro and pound, the latter falling at one point below $1.15 for the first time since 1985, as expectations of an enforced ‘hard’ Brexit and its associated heightened risk increased among investors.



Commodities

West Texas Intermediate crude oil continued to hover near the $50/barrel mark as reports showed massive inventory build-up in the US. Rising oil inventories come as markets have seemed skeptical about proposed production cuts by key oil-producing countries after the International Energy Agency (IEA – A group, consisting of 26 member countries, built to help countries co-ordinate a collective response to major disruptions in the supply of oil) said crude oil supply from those countries hit an all-time high.

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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.