Market Update

Investors puzzled over disparate pieces of economic and world news last week. By the end of the week, major world markets had cooled indicating investors didn’t like what they’d seen.

Under new leadership, the Bank of Japan (BOJ) announced an aggressive stimulus program that will inject $1.4 trillion into its economy over the next two years. The effort is intended to end decades of stagflation. Stagflation is a period of economic stagnation characterised by rising inflation, higher unemployment, lackluster consumer demand, and lack of growth in business activity. Shares in the Japanese market, which closed before U.S. jobs numbers were announced, rose to almost a five-year high. 

Lexington noted that elsewhere in Asia, escalating rhetoric from North Korea kept tensions high on the KoreanPeninsula and negatively affected investor sentiment. 

In the U.K., economic news was largely flat. Retail Sales February 2013 were 0.8% up on a year earlier, the amount spent online accounted for 9.7% of all retail spending (excluding automotive fuel) and unemployment remained unchanged from the previous quarter. 

After hitting an all-time high on 12^th March, the FTSE All-Share Index finished the week down 2.6 percent. The FTSE 100 & AIM Indices also fell, finishing the week down 2.5 percent and down 2.6 percent, respectively. 

U.K. Gilt markets benefitted from uncertainty about the strength of economic growth, the outcome of the Japanese stimulus program, and the potential for violence in Korea. The yield on 10-year U.K. Gilts fell to 7.65 percent.