Trading room at Zurich Life Investments Ireland
Positive prospects for investors
Ian Slattery reports on a positive start to the year, with the global index rising and commodities such as gold, silver, crude oil, and copper all posting gains.
Stocks responded positively to the release of the December FOMC meeting minutes, which outlined the committee's views on GDP growth, and the potential for fiscal stimulus. The US dollar Index and US treasuries rose towards the end of the week as the Federal Reserve minutes and Friday's wage growth data increased the expectation of interest rate tightening in 2017, but still finished the week in negative territory, as the Chinese Renminbi rallied hard early in the week.
In data released on Friday US non-farm payrolls rose by 156,000, less than the consensus expectation, although readings from the previous two months were revised upwards. US wage growth was the big positive from the data, with average hourly earnings now growing at an annual rate of 2.9%, representing the quickest pace of growth since 2009.
Oil briefly hit a 12-month high as the agreed OPEC production cuts started to filter through, and as US stockpiles declined more than expected.
The global index enjoyed a positive start to the year, rising 1.6% in euro terms. Commodities also saw a positive week, as gold, silver, crude oil, and copper all posted gains, with silver the best performer at 3.5%.
The US 10 year bond price rose slightly over the course of the week, as the yield declined from 2.44% to 2.42%. The price on the equivalent German Bund fell during the week, as the yield moved from 0.20% to 0.30%.
The euro was steady against the dollar over the week, with the EUR/USD rate closing the week at 1.05.
The week ahead
Tuesday 10th January: Chinese CPI (Consumer Price Index) figures for December go to print, where the year-on-year growth figure is expected at 2.3%, which represents no change from the November reading.
Thursday 12th January: Eurozone industrial production data for November becomes available, where the consensus is for a month-on-month rise of 0.5%, from a previous reading of -0.1%.
Thursday 12th January: The minutes of the last ECB rate decision meeting are released, where markets will look for further information on how the group arrived at their decision to extend the QE programme, and also look for clues on future policy developments.