Monthly markets review: January 2016
- 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.
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