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Markets were generally steady because of a U.S holiday celebrating Martin Luther King Day. Therefore, sovereign bond yields and FX markets remained largely unchanged ahead of key economic events that will take place during the week.
January 17, 2020
Market Comment | Equity markets to record highs although bond yields see limited gains
Equity markets slightly extended the increases across the board during the week, underpinned by the final agreement on the U.S.-China phase one agreement, the improvement in the U.S. activity data (retail sales and regional PMI) and mixed company earnings.
Shy market reaction after China and the U.S signed phase one of the trade agreement. Meanwhile, U.S and European stocks hit new highs, driven by positive U.S retail sales data.
Investors remained cautious ahead of the signing and the unveiled details of the U.S.-China phase one deal. Against this background, bonds remained well demanded while equity markets showed mixed results, with the U.S. equity market hitting a fresh record high.
Financial markets were broadly steady, although some caution lingers as investors wait for U.S.-China trade agreement progress. Concerning the macroeconomic data, U.S. inflation increased less than expected, whereas China’s trade balance rose in December.
Financial markets began the week on a slightly positive tone. That said, markets traded in a narrow range ahead of this week's main events such as the signing of the U.S.-China phase I trade deal on Wednesday, and the 4Q19 earning season kick-off.
Markets extended the last year-end rally after US-Iran geopolitical tensions moderated. Investors’ risk appetite improved, underpinned by encouraging economic data, confirmation of the US-China Phase One trade deal next week, and the conviction that central banks stand ready to act if needed.
Financial markets veered back toward a risk-on mood, underpinned by fading US-Iran tensions and positive economic data. Equity markets increased across the board, while bond, oil and gold prices declined.