Equities

It was a volatile week for US equities, as the Nasdaq briefly hit correction territory and Q4 earnings fell short of forecasts. European indices were hit by expectations of rising interest rates. Japanese indices were weaker as the government reimposed a quasi-state of emergency in key areas. In China, markets were firmer as monetary policy was eased and the government promised further support for the property sector.

Bonds

The yield on the US 10 year Treasury bond hit 1.9%, its highest level since before the pandemic, before falling back as bond prices rose on weaker jobless claims. In Europe the German Bund yield briefly moved above 0% for the first time since May 2019. Investment grade credit markets saw good demand for issuance from some US banks, while high yield markets were subdued by broad risk off sentiment.

Currencies

The yen strengthened against all majors, while sterling weakened across the board. The euro only succeeded in making ground against sterling, as it also weakened slightly against the dollar.

Commodities

Oil prices touched levels not seen since 2014 on supply concerns, as geopolitical tensions rose. Gold rose 1% in response to rising inflation expectations.

Responsible investing

European Central Bank (ECB) president Christine Lagarde committed to ‘greener’ changes to all the bank’s operations, which could include using the €2.8 trillion asset purchase scheme in the fight against climate change.