Trading room at Zurich Life Investments Ireland
Full swing ahead
US market hits all-time high, as Janet Yellen eases interest rate concerns. Ian Slattery reports on the latest investment news.
Risk assets closed the week higher as dovish comments from Janet Yellen, chair of the US Federal Reserve System, eased market concerns surrounding tighter monetary policy. Yellen signalled the Fed will maintain a patient approach to interest rate hikes. Stocks reacted positively with the S&P 500 climbing 1.4% in dollar terms, to finish the week at an all-time high.
In addition to Yellen's comments economic data in the US was also softer, as inflation figures were flat and retail sales declined -0.2%; against an expectation of a 0.1% rise. US and eurozone sovereign debt saw yields fall on the back of the data releases.
Earnings season also moved into full swing last week as financial heavyweights JP Morgan, Citibank, and Wells Fargo all reported. Expectations are high for this year's Q2 earnings, and will be a key focus in the coming weeks.
The global index returned 1.6% for the week, led by a stellar performance from Hong Kong (+4.1%). Commodities also enjoyed a positive week, as Gold (+1.3%) and Copper (+1.7%) closed higher. Oil relieved some of its recent price pressure, returning 5.2% to close at $46.54 at the end of the week, led higher by increased demand and the lowest US inventories since last autumn. US 10 year Treasuries prices moved higher, with the yield (which moves inversely to price) moving to 2.33%, from 2.39% a week previously. The equivalent German yield was little changed over the course of the week, finishing at 0.59%.
The week ahead
Tuesday 18th July: UK inflation data goes to print, where the year-on-year figure is expected to come in at 2.7%. The data will be closely watched given the ongoing discussions within the Bank of England regarding an interest rate rise.
Thursday 20th July: No change in policy is forecast at the latest ECB interest rate meeting. However, President Mario Draghi may be pushed further at the press conference regarding his recent hawkish comments at the Sintra Conference.
Thursday 20th July: Similarly, in Japan no change is expected when the Bank of Japan meets, although economic growth forecasts may be amended.