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Market and Economic Update – January 2016

Our monthly Market & Economic Update provides an overview of recent events and summarises our latest asset allocation decisions.

Gareth Lewis Gareth Lewis
18 January 2016

Economic outlook

Once again a weaker sterling helped disguise what was otherwise a lacklustre month for global equities as worries over slowing growth and disappointment with new European Central Bank (ECB) stimulus measures sent major equity markets lower. In commodity markets, oil was a notable underperformer with the price of crude oil falling to an 11-year low on concerns of oversupply. Sterling fixed income also lost ground as markets digested the first US interest rate rise in nine years.

The European Central Bank increases quantitative easing

  • The ECB announced further monetary easing in an attempt to raise inflation, after admitting inflation was likely to remain lower for longer.
  • However the measures fell short of investor expectations, causing large swings in the euro and Eurozone equity markets.
  • The ECB decision was not a unanimous one, with some board members arguing that Eurozone growth was already rebounding and lower inflation was being driven more by external factors.
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