Weekly Market Recap: 23rd March 2015

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Global equity markets moved higher last week, buoyed by the statement from the US Federal Reserve. While the Fed removed the word “patient” in terms of their stance on interest rate hikes, the downgrading of economic projections was a sign for investors that the punchbowl won’t be taken away any time soon.

As expected, the more dovish announcement reverberated through the currency markets with the US dollar relinquishing some of the recent gains. The Euro rose 2.55% to $1.079. Government bond yields continued to fall, a worrying reminder that the economic recovery remains in the balance.

In the week that some people expected the Fed to set out a path for rate hikes, the US 10-year government bond yield fell 18bps to 1.93%! Meanwhile, as the economic slowdown in China continues to deepen equity investors salivate on the prospect of China’s central bank easing monetary policy; the Shanghai Composite Index rose 7.25% last week!

Outlook: Week Ahead

On the macro front this week the US will publish the final estimate of fourth quarter GDP. The flash PMI data from Europe, the US and China will provide a more useful leading indication of the momentum behind the recovery, as will the host of consumer and business confidence surveys throughout the week. There are reports on inflation, spending, unemployment and retail sales due out from Japan on Thursday. Durable goods orders in the US will be closely watched as well as a raft of housing data.

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