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Weekly Market Update – April 8, 2016

The Dow closed 35 points higher on Friday with the crude oil recovery and merger & acquisition activity in focus. For the week the index lost 1.2% but was still up 0.9% year to date.

 The main headline of the week was the Fed’s March meeting notes, which struck a similar tone to the Fed chair Janet Yellen’s statements last week. The notes emphasized the concern over weaker global growth and the deterioration of the global financial market, therefore expressing preference for a cautious approach to interest rate hikes. As the market had largely anticipated a more patient Fed, the 10 year Treasury yield remained largely unchanged at 1.72% for the week.

 Crude oil increased 6% for the week, reaching $39.52 per barrel after the Energy Information Administration inventory data showed a surprise decline. Some of the decline in oil inventories were linked to refineries increasing output in anticipation of the upcoming summer demand. Positive news about the potential production freeze deal also acted as a tailwind to crude oil prices, as Russia is reported to support the deal.

 Equity markets were negatively affected by the US Treasury’s surprise crackdown on tax inversions. The merger between Pfizer and Allergen was abandoned, leading to speculation that Pfizer would hunt for other deals in the biotech space. As a result, biotech stocks outperformed the market.

 Next week’s economic calendar highlights include the core CPI and initial jobless claims (Apr 14).

 Have a nice weekend,

 Natalie Do

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Ulland Investment Advisors

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