Monthly markets review: January 2016
An overview of markets in January 2016 when worries over growth in China and the US, as well as volatile oil prices, put significant pressure on global equities.
Unstructured Learning Time
- It was a turbulent start to 2016 as renewed instability in the Chinese equity market and a further deterioration in the oil price saw global stockmarkets post steep negative returns.
- In bond markets, perceived safe havens rallied with Treasury, gilt and Bund yields declining.
- In the US, the S&P 500 returned -5%, negatively affected by fears of slowing global and domestic growth, the latter underlined by news that GDP had expanded by a disappointing 0.7% in Q4 2015.
- In the eurozone, global growth concerns combined with worries over the banks, particularly non-performing loans in the Italian banking sector, resulting in the MSCI EMU index returning -6.3%.
- On the final day of the month the Bank of Japan surprised markets by announcing a negative interest rate policy on excess reserves held at the central bank.
- Emerging markets lagged their developed counterparts. China underperformed amid a series of headwinds including ongoing yuan weakness versus the US dollar, weak economic growth, and the spill-over effect from the removal of selling restrictions in mainland stockmarkets.