Trading room at Zurich Life Investments Ireland
Equities hit a high note
Confidence in the US economy was matched by further positivity with the Conference Board's index of leading economic indicators now sitting at its best level in over 10 years, writes Ian Slattery.
As expected, the US Federal Reserve raised short-term interest rates last week by 25 basis points, to give a new target range of 0.75%-1.0%. The vote of confidence in the US economy was matched by further encouraging economic data, with the Conference Board's index of leading economic indicators now sitting at its best level in over 10 years.
European stocks performed well during the week, as the Fed's move higher was complemented by Dutch voters' rejection of far-right candidate Geert Wilders, in favour of current leader Mark Rutte.
US treasury prices rose during the week as comments from Chair Janet Yellen in the wake of the Fed announcement were seen as more hawkish. Oil posted a slight gain on the back of falling US stockpiles and comments from Saudi Arabia; committing to curtailing its production.
The global index moved higher by 0.4% over the course of the week, with stocks in Hong Kong leading the way, up over 3% in local terms. Gold moved higher by just over 2%, as both silver and copper also saw positive returns.
The US 10-year bond price moved higher, as Yellen's comments kept rate expectations for the year in check. The yield, which moves inversely to price, closed the week at 2.50%, from 2.57%. The equivalent German yield also moved lower, from 0.48% to 0.43%. The euro/dollar rate finished the week at 1.07, whilst euro/sterling was at 87 pence per euro.
The week ahead
Tuesday 21st March: UK inflation data goes to print, where the consensus expects a rise to 2.1% (year-on-year), from the last reading of 1.8%.
Friday 24th March: Eurozone Purchasing Managers Index information will be closely watched for signals of continued strength in the eurozone economy. The consensus is for a reading of 55.8 (last reading: 56.0).
Friday 24th March: US durable goods orders data is released, and the market expects a month-on-month increase of 1.1% (last reading: 2.0%).