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Weekly Investment News 10 October 2016

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Posted on: 10 Oct 2016

Equities flat as sovereign bonds fall during mixed week

 

Week in Review

Economic data began the week with several positive readings, before the nonfarm payroll numbers in the US disappointed slightly. Payrolls rose 156,000 in September, versus an anticipated consensus figure of 172,000. However, the market was less sensitive to this report versus previous readings as there are still two further readings before the December Federal Reserve interest rate meeting; where the probability of a rate rise is roughly 64%.

 

Oil moved above $50 for the first time in three months. Last week’s OPEC deal, coupled with fears over the impact of Hurricane Matthew on supply, helped to drive the price action.

 

Sterling was subject to a ‘flash-crash’ in Asian trading late last week, falling over 10% versus the dollar before recovering. Some speculate that it was the result of a trading error whilst others pointed to comments from both Teresa May and Francois Hollande, which stoked fears of a hard Brexit. 

 

  Index 1 Week Return 30.09.16 to 07.10.16 Year to Date Return 31.12.15 to 07.10.16
   

Local currency

%

Euro

%

Local currency

%

Euro

%

Global (euro) FTSE World (total return) 0.1% 0.1% 5.0% 5.0%
US S&P 500 -0.7% -0.4% 5.4% 2.5%
Europe FTSE Europe Ex. U.K. -0.5% -0.5% -6.3% -6.3%
Ireland ISEQ -3.2% -3.2% -14.0% -14.0%
UK FTSE 100 2.1% -1.8% 12.9% -7.2%
Japan Topix 2.1% 0.8% -12.7% -0.2%
Hong Kong Hang Seng 2.4% 2.7% 8.8% 5.8%
Bonds Merrill Lynch Euro over 5 -1.6% -1.6% 8.3% 8.3%

 

The global index was nearly flat for the week, edging up 0.05% with Hong Kong the best performing of the major indexes, returning 2.7% in euro terms. Oil had another positive week, returning over 3%, and remains up nearly 35% year-to-date. Copper slipped over 2%, but is still in positive territory for the year. Gold (- 4.5%) and silver (-8.5%) extended their short term decline.

 

The US ten year bond lost value, as the yield (which moves inversely to price) moved from 1.59% to 1.72% over the course of the week. In the eurozone, the German equivalent also saw a yield increase to finish the week in positive territory at 0.02%. The big currency moves of the week involved Sterling, which weakened against the US dollar and also the euro, where the rate finished at 0.90p per euro. 

 

The Week Ahead

 

Wednesday 12 October Friday 14 October Friday 14 October
Although data released since the meeting will diminish their usefulness, the FOMC minutes will be examined to see if the perceived widening divisions in the committee’s policy stance are evident. US retail sales figures for September will be released where the consensus is for an expansion of roughly 0.4% (month-on-month), following a negative reading of -0.3% in August. US earnings season begins, with the impact of negative interest rates on bank profitability a particular focus. The results of JP Morgan and Citigroup late on Friday will be ones to watch. 

 

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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