Weekly Market Overview – US Dollar slide sees negative equity returns for UK investors

Mon 29 Jan 2018

Global equities were mostly positive in local terms last week, however a fall in the US Dollar, combined with Sterling appreciating, meant that returns for UK investors were generally negative. Weak US Dollar performance was largely due to a statement at Davos by US Treasury Secretary Steve Mnuchin being interpreted as suggesting that the US government would prefer the currency to be weak and Mario Draghi expressing anger that the US was “talking down” its currency. However, on reflection, Mnuchin’s comments seem to have been taken out of context. US equities, which were up 2.2% in local terms, were down -0.2% in Sterling. European and Japanese equities returned -0.8% and -0.9% respectively, relatively in line with UK equities at -0.8%. Emerging Market equities saw the strongest performance, up 0.9% in GBP terms. UK 10Y Gilt yields rose 7.0 bps, resulting in a -0.6% return for Gilts for the week. However US 10Y Treasury yields were down -1.3bps. In USD terms, Gold gained 1.3% and Oil returned 4.4%.