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Weekly Investment News - 13 June 2016

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Posted on: 13 Jun 2016

‘Brexit’ remains in focus; sovereign yields continue to fall.

 

 

Week in Review

  • After starting strongly, equities reversed in the latter half of the week as Brexit risks once again came sharply into focus. All the major indexes finished the week in negative territory, and the ‘risk averse’ tone spread to other risk assets, which also saw a weaker second half of the week.

 

  • Sovereign bond yields hovered near record lows as the benchmark 10 year German Bund yield touched 0.01%, whilst its Japanese counterpart slid to minus 0.15%. The ‘yield curve’, which represents the spread between shorter and longer dated bonds, has flattened recently, as the amount of sovereign bonds offering negative yields continues to rise.

 

  Index

1 Week Return

03.06.16 to 10.06.16

Year to Date Return

31.12.15 to 10.06.16

   

Local Currency

%

Euro

%

Local Currency

%

Euro

%

Global (Euro) FTSE World (total return) -0.7% -0.7% 0.1% 0.1%
US S&P 500 -0.1% 0.9% 2.5% -1.2%
Europe FT/S&P Europe Ex. U.K. -2.3% -2.3% -8.8% -8.8%
Ireland ISEQ -2.7% -2.7% -8.3% -8.3%
UK FTSE 100 -1.5% -2.3% -2.0% -8.1%
Japan Topix -0.5% 0.1% -14.0% -6.3%
Hong Kong Hang Seng 0.5% 1.6% -4.0% -7.6%
Bonds Merrill Lynch Euro over 5 0.9% 0.9% 6.9% 6.9%

 

The global index (in euro terms) finished the week in negative territory (-0.7%) erasing gains from earlier in the week. 

 

10 year US treasury yields were down to 1.64%, close to a low last seen in May 2013, as US bond and ETF funds saw strong inflows during the week. The German equivalent fell to finish at 0.02%, just staying in positive territory.

 

Eurozone equities returned -2.3% for the week, underperforming both the UK and US benchmark indexes.

 

Oil rose once again posting a 1.9% return in euro terms, which represented a fifth weekly rise in succession, the best run in four years.

 

The EUR/USD rate weakened slightly to finish the week at 1.13. Sterling saw another volatile week on the back of Brexit concerns and the EUR/GBP rate closed at 0.79, from 0.78 a week ago.

 

Copper slid further, extending its losses for the year to 8.2%. Gold and silver both finished the week in positive territory, extending the strong returns seen year-to-date.

 

 

The Weeh Ahead

 

Wednesday 15 June

Wednesday 15 June -

Thurdsay 16 June

Thurday 16 June
The Federal Open Market Committee (FOMC) meets where the expectation is for no rate hike, following weaker than expected economic data and a more ‘dovish’ tone in recent weeks. The consensus expects the Bank of Japan to keep its policy stance and economic assessment unchanged, with further easing more likely later in the summer than this week. There is no expectation for any change in policy stance of the Bank of England when the Monetary Policy Committee (MPC) meets on Thursday.

Brosnan Boylan Golden Ltd, 128 Bank Place, Mallow, Co. Cork. is regulated by the Central Bank of Ireland.

Brosnan Boylan Golden Ltd trading as Farm First Insurance is regulated by The Central Bank of Ireland.

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