Markets In-Review: Markets Conclude Soft Session on Stronger Note

■ Equity markets continue to lose momentum, with S&P 500 recording 1% weekly decline

■ Alcoa (AA) fails to meet analyst expectations, starting U.S. earnings season on wrong foot

■ EUR/USD loses over 2% weekly on entrenching anticipation for a Fed Dec hike

■ Risk-off sentiment weighs on U.K. markets, dragging FTSE 100 to 0.4% weekly decline

The fourth quarter continues to prove unfriendly to stock markets. The S&P 500 lost 1% during the trading week, summing to a 1.6% loss since the beginning of October. Moreover, the earnings season is off to a weak start with Alcoa failing to meet analyst expectations for 33.5 cents per share, on Tuesday, at 32 cents per share.

Friday saw the U.S. markets kick off to a solid start with both JP Morgan, as well as Citigroup beating expectations. Monetary policy, however, failed to provide backwind, with declines recorded at the S&P following Fed Chain Yellen’s speech during the day. Awkwardly, fixed income markets did not see Yellen’s commentary as hawkish, with the yield policy sensitive U.S. 2 year bond decreasing from 0.84% to 0.82% as Yellen began talking.

Brexit woes prove persistent

Expectation for a Fed December rate hike have translated to a stronger USD. EUR/USD declined at four of the five daily sessions of the week, summing to -2.04%. GBP/USD, similarly, has lost 1.95% for the week, summing to a 6.5% depreciation for the Sterling vs. the Dollar since the beginning of the month and more than a 20% depreciation since the Brexit vote in June. Friday also saw Bank of England Governor Carney saying that the bank is willing to tolerate higher levels of inflation, making fixed interest rate U.K. bonds less attractive. Combined with an overall sense of instability at the British economy oozing into the sovereign bond market, the yield of the U.K. 10 year government gilt, which moves inversely to its prices, has climbed to 1.095% during the week, up from 0.641% at the end of September.

Concerns for the U.K. economy are also reflecting at equity markets with the FTSE 100 losing 0.4% during the week, augmenting losses from the weakening of the Pound itself. The German DAX, alternatively, proved a safer haven for European equity investors, adding 0.8% during the week, to 10,580.38 points.

Oil prices are also fairly volatile as of late. After peaking at USD 51.6, prices of the black gold took a beating on Wednesday, amid reports that Opec’s production had increased in September, in spite of speculation of it planning to freeze output in order to increase prices. Oil prices continued to tumble on Wednesday, amid reports of a first increase in U.S. crude inventories for six weeks. Ending the week at USD 50.3 per barrel, however, oil still seems prone to push prices higher, globally. The latter is truer considering that agricultural goods’ prices are also on the rise, with Corn recording a 4% weekly gain and Wheat prices adding 6.5%.