Global equities (in euro terms) were well ahead last week but much of the gains related to euro currency weakness, as markets price in further monetary easing in the eurozone. Investors continue to focus on China as well as the timing of US interest rate rises. There is now a 75% chance of lift-off of US rates in December 2015 following more hawkish comments from the Federal Reserve. Euro currency weakness has significantly improved returns for eurozone investors in 2015 (see table below). Equities remain reasonably valued on a yield basis compared to cash and bonds.

The global index (in euro terms) rose by 2.8% last week and has given a total return year-to-date of plus 13.8%. Technically, the Index has pushed through the critical 200-day moving average on the upside and is now 16.2% higher than the low on 24th August. There was a mixed bag of returns amongst the major equity markets in local currency terms last week ranging from plus 2.7% in Ireland to minus 0.5% in Australia. The influential US market was up 1.0% on the week.

Eurozone bond prices were down by close to 2% on the week. Overall, eurozone bonds have given a return of plus 1.2% year-to-date. Bonds reacted adversely to the increased chance of a US rate hike in December as well as strong US payrolls data; this despite an expected small rate cut in the eurozone. The German 10-year bond yield rose from 0.52% to 0.69% last week. Equivalent US yields rose from 2.14% to 2.33%. Commodity prices in general were down by 2.4% (in dollar terms) last week, with oil prices off 5%, and are down by 17.0% so far in 2015.