After a rollercoaster ride through January, a strong finish last week recovered some of the ground lost since the start of the year. The FTSE 100 finished the month down 2.5%, after falling as much as 9.6%.

The recovery in equities started initially as a bounce from what was seen by many as an overreaction to investor concerns about risk. With several equity markets having fallen over 20% from their peak, bargain hunters saw an opportunity to buy at attractive levels. Positive sentiment was enhanced late last week by the Bank of Japan announcing that it was introducing negative interest rates. Negative rates set by the central bank is another tool used to encourage banks to lend rather than hold cash on deposit, therefore spurring investment and spending in the economy. Such rates are already in place in Europe. However, the Bank of Japan Governor has up till recently spoken out against such a policy, so the announcement came as a significant positive surprise for investors. A commitment made by the central bank to continue with additional monetary stimulus until inflation and real earning growth returns has been seen as significant support for the Japanese economy and the wider Asian region.

The US Federal Reserve also met last week for their first meeting following the 0.25% interest rate rise in December. It was anticipated that no further increase would happen this month. However, the meeting was carefully monitored for hints as to when further increases would occur. After a turbulent January and greater economic concerns, it appears that the future increases may become less frequent than previously anticipated. The Federal Reserve was quoted as saying it was “closely monitoring” global economic conditions.

This week will see the Bank of England interest rate decision announced on Thursday with the US non-farm payrolls and US unemployment rate announced on Friday.

About Strawberry Invest

Strawberry’s aim is simple, to provide you with the tools to take control of your investment portfolio through our investment platform at an incredibly low cost. As well as this, we have a dedicated knowledge hub that has a number of useful articles to help investors analyse investment risks, construct their investment portfolios, learn about investment definitions and terms & tips for those investing for the first time.