Global weekly: Mixed and volatile

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It has been a mixed week, as disappointing economic data, Brexit and oil prices gave markets more than enough to chew on. Equity markets, however, appear to be gradually shrugging off their problems.

Data from both the US and the eurozone has been weaker than expected lately, as a soft patch continues. A referendum on Britain leaving the European Union is now fixed for June, bringing into focus “Brexit” fears. The oil price also continues to lead markets and volatility. Markets retreated with the oil price when the Saudi oil minister said he was prepared to keep prices low to drive out US producers. But, later in the week, as oil prices rose, so did markets.

Central banks also continue to drive market behaviour. This week, the People’s Bank of China announced that it still had monetary policy tools at its disposal, which buoyed markets. We believe that central banks will continue to focus on fostering growth. We expect that the European Central Bank will increase its monetary policy stimulus in March and that the US Federal Reserve will not hike rates in 2016.

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