GTC EB Trendline – March 2016

Global: The proverbial yo-yo

The first three months of 2016 saw global equities following an almost V-shaped pattern with stocks declining sharply up to mid-February and rebounding significantly at quarter end to close virtually flat in Dollar terms with the MSCI World Index reflecting a decline of 0.19 %. Emerging markets followed a similar pattern but were able to outperform their developed market peers by returning a positive 5.6% for the quarter.

In the U.S. the market was spurred on by forecasts that further interest rate rises were being deferred. This was after Federal Reserve Chairperson Janet Yellen reported to Congress in February that volatility in global financial markets could impact negatively on U.S. economic growth which was reiterated in the report of the Federal Open Markets Committee in March.

This sentiment was further strengthened at a later speech at the end of March by Yellen reminding that the Central Bank would have to proceed cautiously in raising rates. These statements represented a U-turn in policy after the Fed had begun to introduce an interest rate normalisation policy in December for the first time in 10 years.

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