In his latest review of the markets performance, Ian Slattery talks about how the US interest rate rise and a weaker euro have boosted equity returns.
Stocks took a bit of a breather this week, as the US closed out one of its strongest quarterly performances in a number of years. Concerns about a widening Italian budget deficit impacted on European markets, but the weaker euro currency enhanced returns from US dollar denominated assets.
The Federal Reserve raised US interest rates on Wednesday, in a move that was widely expected by market participants. It also removed the reference to ‘accommodative’ in relation to monetary policy, which signals they are moving to a more neutral level of interest rates.
US consumer confidence remains near an all-time high in September, while WTI oil remained comfortably above the $70 level as OPEC showed little sign of increasing short term supply.
The global index was up 0.7% in euro terms, as a weaker euro helped Irish investors. The US, UK, and Japanese exchanges were the best of the major markets.
Oil was up over the course of the week, and closed at $73/barrel. Gold lost further ground as interest rates moved higher and closed at $1,192 per troy ounce.
The 10 year US bond yield finished at 3.06%, having started the year at 2.41%. The German equivalent also closed higher at 0.47%.
The EUR/USD rate finished the week at 1.16 with the EUR/GBP rate at 0.89.
THE WEEK AHEAD
Monday 1st October
The UK Conservative Party Conference continues, which will be closely watched for any progress in relation to the UK’s stance in Brexit negotiations.
Wednesday 3rd October
PMI data for the US is released, where the consensus expects a continued expansion in both manufacturing and services.
Friday 5th October
US non-farm payroll data for September goes to print where the consensus expects a reading of 188,000, with the unemployment rate to tick down to 3.8%.
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