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Stephen Lennon’s Market Review April 16th

16 April 2018

LAST WEEK IN 30 SECONDS...

It was a volatile week for equity markets driven principally by US President Donald
Trump’s tendency to change his mind over key political issues and his extensive use of
social media. After boosting equity markets at the beginning of the week, hinting at a
softening of approach in the trade battle with China, Trump took aim at Russia and their
support of Syria in a series of tweets. The DJIA, NASDAQ & S&P 500 all managed to finish
the week in positive territory despite this constant political commentary from Trump.

European equities also finished the week higher as geopolitical concerns appear to be less
keenly felt in the region. The DAX finished the week up 1.64% - marking its 3rd straight
week of gains.

In fixed income markets – the yield on the 10-year German Bund ended the week at
0.52% up 2bps after German inflation data came in broadly in line with expectations while
the equivalent US treasury yield rose 6bps to 2.83%.

Finally, WTI Crude Oil reached its highest level in over 3 years before retreating slightly.
It finished the week at $65.80 up 6.08%.

THIS WEEK IN 30 SECONDS...

Q1 earnings season is now well and truly underway and this week sees some of the biggest companies in the world publish their results. Look out for earnings data from the likes of tech giant Netflix and US bank Goldman Sachs. Elsewhere Q1 Chinese GDP figures are published on Tuesday while UK CPI data will be released on Wednesday.

CHART OF THE WEEK

An interesting report was published last week by the New York Attorney General relating to fees charged by active managers in the US. One of the interesting points made was that investors often do not have access to Active Share information which is a key metric when assessing an active manager. It measures the degree of overlap between holdings in a fund and holdings in the benchmark index and can be useful when trying to avoid ‘closet benchmark huggers’. As can be seen from the chart of the 2,344 funds surveyed, some managers are charging huge fees for low active share (bottom right of chart).

Screen Shot 2018-05-11 at 10.27.30 PM
Equities Value 1 Wk Change YTD
FTSE World € 556.88 1.12% -3.10%
DJIA 24360.14 1.79% -1.45%
Nasdaq Comp 7106.65 2.77% 2.94%
S&P 500 2656.30 1.99% -0.65%
FTSE 100 12442.40 1.64% -3.68%
Bonds 10 Yr Value 1 Wk Change YTD
Germany 0.52% 0.02 0.09
Ireland 0.93% 0.02 0.26
UK 1.44% 0.05 0.25
Japan 0.04% -0.01 -0.01
USA 2.83% 0.06 0.42
Forex Value 1 Wk Change YTD
EUR/USD $1.233 0.53% 2.66%
EUR/GBP £0.865 -0.61% -2.53%
EUR/YEN ¥132.55 0.92% -2.01%
USD/YEN ¥107.53 0.39% -4.55%
Commodities Value 1 Wk Change YTD
WTI Crude $65.80 6.08% 8.83%
Brent Crude Oil $70.18 3.95% 5.36%
Gold 100 oz $1,348.55 1.21% 3.46%
DJ USB Index $87.44 0.58% -0.82%
Invesco staff portraits, photographed at their office in Sandyford, Dublin on Monday, 13 February 2017.
Photography by Brendan Duffy.

By Stephen Lennon, Performance Analyst

Stephen is based in our Dublin Office having joined Invesco in October 2015. He previously spent 2 years working with AIB and has a total of 3 ½ years’ experience in the financial services industry. Stephen is a graduate of Trinity College Dublin, where he graduated with an Honours degree in Business & Economics and is currently undertaking the CFA Program.

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