WEEKEND WEB: Gold and oil prices are on the up at last

Scott Woods
Scott Woods
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SCOTT WOODS looks at the global financial scene in MONEY MATTERS...

Global shares rose as developed markets like Europe and the US more than offset weakness in Asia and emerging markets.

Mining stocks were particularly strong in Europe, with the rally in commodity prices showing no signs of losing steam. The price of gold climbed to a four-month high, while Brent crude touched its highest in three years.

Global bond prices fell again (yields rose); indeed, the yield on the 10-year US Treasury rose to almost 2.60 per cent, hitting its highest level since March 2017, as investors focused on the potential for faster inflation.

The Japanese sun has been rising. The Nikkei 225 index, last week at its highest level since 1991, gained 24.7 per cent (in local currency terms) over the past year. The reason? An economy firing on all cylinders and a little help as the Bank of Japan has kept its stimulus pedal pressed firmly to the floor.

Yields on Japanese government bonds have been crushed; investors, unable to earn a yield, have been driven to equities and the Bank of Japan has even been buying 
equity exchange-traded funds, marketable securities that track an index, itself, though it could cut back on purchases this year.

The price of gold climbed to a four-month high last week, and the metal’s sparkling performance in the face of tighter US rates, though counter-intuitive, has become the norm. Since the global financial crisis, gold prices have turned higher soon after the US Federal Reserve (Fed) has raised interest rates. Gold has outperformed most major assets since the Fed last month raised rates, even Bitcoin. Oil is another commodity having a good week, trading at the highest level in three years.

Source of information Old Mutual Global Investors (OMGI).

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