Global weekly: As the year draws to an end

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The Federal Reserve’s rate hike on Wednesday didn’t prompt fireworks in financial markets. Equity investors took the Fed’s decision positively, as Chair Janet Yellen indicated that the central bank will remain on an accommodative path. Bond markets had a muted response to the Fed’s well-signalled move.

Equity markets update
After a weak start, sentiment among equity investors improved during the course of the week. Investors welcomed the Fed’s first rate hike since 2006, as they took it as a confirmation that the US economy is strengthening. At the same time, investors assume that further Fed hikes will come only gradually and that rates will remain low from a historical perspective in the coming years. Looking back at 2015, we see substantial differences in the performance of equity markets across the world. Currency developments played an important role here. Although the year is not fully over, it looks like 2015 will turn out to be another good year for European investors. Shares in Europe have gained some 5% for the year. Taking into account a 3-4% dividend yield, total return is close to 10% for 2015.

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