Investment markets and key developments over the past week
- Share markets continued to recover over the past week as quantitative easing (QE) ended in the US uneventfully and US profits and economic data continued to impress. In addition, Japan announced a significant expansion in its QE program and that its Government pension fund would double its share exposure. News out of the Eurozone was a bit better than expected. US shares rose 2.7% to a new record high, European shares rose 2.1%, Japanese shares surged 7.3%, Chinese shares rose 5.1% and Australian shares rose 2.1%. Bond yields rose in the US, were flat in Australia and fell in Europe. Commodity prices were mixed with gold sliding on the ending of US QE, but metal prices rose. While the Japanese yen plunged and the euro fell against the US dollar, the Australian dollar was unchanged.
- The main event over the past week was the US Federal Reserve’s (Fed’s) long anticipated ending of its QE program. The basic messages from the Fed are that the US economy, including the labour market, is continuing to improve justifying an end to QE but that there is no rush to raise interest rates – signalling that it still anticipates a “considerable time” to elapse before the first rate hike. While the Fed is now dependent on how the data unfolds, our assessment is that the first rate hike won’t come till mid next year or later.
Please click here to read the full article: Weekly Report ~ 31 October 2014