Weekly market review around the world: 2 - 6 June
A volatile week saw most equity markets lose some ground, with the exception of Japan.2 - 6 June
US unemployment figures illustrated a rise to a near four-year high of 5.5 percent in May, from 5 percent in April, and with average gas prices now at a USD 4 a gallon, the S&P fell by 2.8 percent and the NASDAQ closed down 1.9 percent.
In contrast, Japanese equity markets found some momentum over the week enjoying positive gains over the period, with the Topix index rising by 1.4 percent. The Nikkei 225 Average rose 1.1 percent, to a five-month high – its second successive weekly gain.
Europe & UK
In Europe, equity markets followed the trends of the US, spooked by comments from Jean-Claude Trichet (the ECB president) on the potential for a rise in euro-zone interest rates in July. The German Dax fell 4.1 percent, while France’s CAC 40 declined by 4.3 percent.
Both the European Central Bank (ECB) and the Bank of England maintained its monetary policy, keeping interest rates on hold at 4 percent and 5 percent respectively. The FTSE All-Share closed down 2.4 percent for the week.
Asia & Developing Markets
Outside Japan, other Asian equity markets suffered losses, tracking the negative performance in the US. Hong Kong’s Hang Seng fell by 0.5 percent, while the Hong Kong China Enterprises index of Chinese stocks listed in Hong Kong closed down 1.9 percent.
Latin American equities also fell, with Brazil’s Bovespa down 3.9 percent and Mexico’s Bolsa declining by 2.6 percent.
European government bonds saw a decline. By contrast, in the US, the yield curve steepened with 2-year yields down 20bps to 2.5 percent and 10-year yields closing the period down 6bps to 4 percent.
In currency markets, the euro moved higher against the US dollar following Jean-Claude Trichet’s statement. Sterling lost ground as the BoE decided to keep interest rates on hold.
In commodities, oil staged another strong rally at the end of the week, rising more than USD 15 a barrel to touch a record high above USD 139. Gold rose 1 percent following renewed weakness in the US dollar on the back of US unemployment figures for May.
For further information, or to discuss how current global economic conditions are affecting your investments, please feel free to contact Craig Welsh at Spectrum IFA Group or visit www.expatfinance.nl.
This commentary was compiled with the assistance of BlackRock, one of the world’s leading investment management groups.