Last week started off positive for global equity markets. However, a selloff on Thursday and Friday left the week broadly negative. US non-Farm payrolls came in higher than economists expected at 211,000 following a particularly strong 298,000 addition a month earlier. This data continues to signal a robust US economy, which is sustaining job growth and increasing consumer spending even as the significant oil and mining sectors struggle. A strong and stable domestic economy gives the Federal Reserve scope to start the interest rate raising cycle and lift-off what were initially “emergency rates”. Raising rates are important as many market participants are becoming increasingly concerned that if monetary policy needs to be loosened there are few weapons left in the Federal Reserve’s arsenal. Rising interest rates now gives the opportunity to lower them again in the future if required.

Friday last week saw the latest meeting of OPEC, the Organisation of Petroleum Exporting Countries. Oil importing countries were again the big winners from their meeting, as OPEC decided to maintain its current policy of flooding the market with excess supply with the hope that it will drive out higher-cost rivals. Many Asian countries are the notable beneficiaries of this policy, as the majority of oil supplied to the region is from OPEC members. A lower oil price has helped temper inflation and provided a boost to consumers’ spending power. India has been a major beneficiary of this policy, as the economy relies greatly on consumer spending to spur growth and has historically struggled with high inflation. The country has been a bright spot in what has been an otherwise disappointing year so far for Asian and Emerging Market stock returns.

The week ahead will see the Bank of England interest rate decision announced, which is widely assumed to stay at 0.5%. On Friday, US November retail sales will give the first indication of the consumer attitudes going into the festive period and will be closely watched.

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