Equity indices moved mostly sideways this week, ahead of the inauguration of Donald J. Trump as the 45th President of the United States. Bond markets retreated, with bond yields – moving inversely to prices – edging higher.
Equity markets were rather stable this week, hovering around their all-time highs in the US and 12-month highs in Europe. Statements by central banks were in focus but did not move equity markets much. The Fed confirmed the outlook of several rate hikes and pointed at inflation risks, while the ECB maintained its interest rate policy, as expected. Investors were also looking for clues about international policies. UK Prime Minister Theresa May indicated that the UK’s departure from the EU will be a so-called ‘hard Brexit’. As a result, share prices of UK large caps that have high international exposure were supported, while companies that have a large base in the UK voiced their concerns. In the US, equity markets were steady ahead of today’s (Friday) inaugural speech by president Trump, in which he may provide more details on his stimulatory economic plans. At his press conference last week, Trump failed to provide investors with much information on economic policies.
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