Markets update: Global equities rise as currency strength reduces euro returns

Economy, Finance, Markets | Mon 16 Oct | Author – Business & Finance

US equities remain on an upsurge, US retail sales data showed an increase last month and gold continues to gain, writes Ian Slattery.

Ian Slattery Zurich investments

Ian Slattery

US equities continued to hit record highs, with incremental moves higher over the course of the week. Retail sales data saw a monthly increase of 1.6% in September, which represents the biggest one-month increase in over two years. The University of Michigan consumer sentiment survey also saw a solid gain, with the September reading rising to a 13-year high.

Macro factors remained supportive this week with higher oil prices and no surprises from the latest Fed minutes contributing to a ‘risk-on’ attitude. The euro currency also strengthened following more reconciliatory tones emanating from Catalonia.

Retail sales data saw a monthly increase of 1.6% in September, which represents the biggest one-month increase in over two years.

Eurozone growth saw a bullish upgrade from the IMF’s latest World Economic Outlook, with growth now expected to come in at over 2% for 2017. This was, however, somewhat tempered by a downgrade to UK prospects which it noted were ‘a notable exception’ to an improving global economic outlook.

The global index in euro terms was flat last week as a stronger euro weighed on Irish investors. Gold gained 2.2% over the period whilst copper was up an impressive 3.5%.

Oil continued its recent upward trend, returning 4.4% whilst closing above $51 per barrel.

The influential US ten-year bond yield moved to 2.27% from 2.25%, as a ‘risk-on’ environment prevailed. The German equivalent stood at 0.40% from 0.45% a week ago and the EUR/USD rate closed at 1.18.

THE WEEK AHEAD

Tuesday 17th October

Inflation figures for September for both the UK and eurozone go to print, with the year-on-year readings expected at 3% and 1.5%, respectively.

Wednesday 18th October

The big overnight focus on Wednesday will be the opening speech from President Xi at the opening of the 19th Chinese Communist Party Conference.

Friday 20th October

Brexit talks will be firmly in focus as the European Council meets in Brussels.

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