Trading room at Zurich Life Investments Ireland
Equities were more volatile this week as a direct result of pre-Fed decision nerves, writes Ian Slattery, Zurich Life Assurance plc.
Last week’s markets remained keenly focussed on central bank activity ahead of this week’s decisions from the Bank of Japan and the US Federal Reserve. The ECB and the Bank of England did not make any moves in their most recent decisions, and there was more perceived uncertainty in comments from Fed members during the week.
Against such a backdrop equities were mixed, with the influential S&P500 index in positive territory for the week, whereas European stocks suffered as Deutsche Bank was hit by a $14bn claim related to mis-selling prior to the financial crisis.
Global bond yields, which move inversely to price, rose again last week as markets begin to price in the prospect of no further loosening of monetary policy. Longer dated bonds lost relatively more value than those with shorter maturities, which results in the steepening of the yield curve.
European stocks suffered as Deutsche Bank was hit by a $14bn claim
The global index ended the week in negative territory to finish at -0.5% at close on Friday, however it remains up over 3% year-to-date. Oil was down over 6%, as price volatility persists in the market and copper finished up over 3% and moved into positive territory for the year in dollar terms.
Silver and gold saw further declines, with both down over 1% on the week. However, they are still firmly returning positively year-to-date on the back of a strong first half of the year performance.
The influential US 10-year bond yield crept up further to finish at 1.69%, whilst the German equivalent maintained a positive yield by closing just above zero at 0.01%.
THE WEEK AHEAD
Tuesday-Wednesday September 21st & 22nd
The Bank of Japan will conduct a ‘comprehensive assessment’ of the effects of its current monetary policy. There is some scope for change with a further move into negative rates predicted in some quarters.
Wednesday September 21st
The highly anticipated Federal Reserve rate decision is made. Although, the chances of a move are, according to Bloomberg, approximately 18%. The majority of the market is pricing in December as the next rate hike date.
Friday September 23rd
Flash German PMIs and Consumer Confidence are released and, as always, will be closely watched for implications for the wider eurozone economy.
The team at Zurich Investments is a long established and highly experienced team of investment managers who manage approximately €13bn in investment assets and have a reputation for delivering consistent performance. To find out more about Zurich Life’s funds and investments, w: zurichlife.ie/funds t: @ZurichLife