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BlackRock: Weekly Market Views 20/2/2012
Categories: Investments
Global Market Analysis
It was another strong week for risk assets with global equities rising just under 2%, the UK up by just under 1%, and the star stand-out market being Japanese equities which rose 5% on the week. US and UK bond prices fell slightly, although they rallied in Germany and Japan, and it was another strong week for commodities, with the WTI oil price rising by nearly 5%, natural gas by 8% and a number of agricultural commodities by 1-2%. On the currency front the biggest mover was the yen's decline by 2.2% against the dollar, which was generally stronger over the week.
The principal event was the Bank of Japan's decision to add 10 trillion yen (about 2% of Japanese GDP) to its outright purchases of Japanese government bonds, and also to publish an explicit target of 1% for the Consumer Price Index (CPI). In doing so, the bank noted the strength of the yen and the impact it was having on the Japanese economy. The bank said its direct aim in this is to bring the currency down and reflate the Japanese economy.
On the economic front, this week we'll see European flash Purchasing Managers Index (PMI) figures, and these are likely to show a very weak economy is southern Europe and a not particularly stronger economy in northern Europe. Chinese PMI reports are expected to show much lower sales of personal technology items as well as very poor demand for housing. We also know that US house prices have risen by about 6-7% so far this year, and that's helpful to nominal GDP. In aggregate, this is a flat to somewhat improving outlook for economic activity, which taken with the extra liquidity being provided by central banks globally goes a long way to explaining the very strong equity market returns we have seen so far this year.
Update on the fixed income landscape covering government and corporate bonds and currency moves.
Precious Metals update
The Weekly Gold Report was not published this week, due to commitments in the Natural Resources Team. The prior week's report to 10 February is still available here.
Other News
Conference call on gold
Evy Hambro, joint Chief Investment Officer of the BlackRock Natural Resources Equity team, hosted a conference call for investors on Tuesday 14 February. A replay of the conference call is available here.
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| Source: BlackRock, DataStream Equity, currency and bond markets measured over seven days, from previous Friday's close to Friday's close. All index returns in local currency terms. All equity index returns are price only. **Bonds: 10-year yield. |
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