Markets ended this week lower after the S&P 500 ended its four-week winning streak. Markets got a reminder from the chairman of the Federal Reserve Powell that fighting inflation remains the central bank's top priority, and that interest rates may stay higher for longer than some expect.
Energy was the only winning sector for the week as this segment of the economy continues to enjoy positive market sentiment.
Fixed Income Instruments
The Bloomberg Aggregate Bond Index finished the week lower along with high-yield corporate bonds, which are represented by the Bloomberg High Yield index. Bonds lost ground as investors reassessed direction following the Fed statement and comments.
Raw materials
With continued concerns about energy supplies in Europe as a result of the Ukraine-Russia conflict, natural gas finished in the green this week. U.S. natural gas prices are near a 15-year high, up 150% year-to-date. Metals had a subdued performance this week as global demand remains a concern following a softening economic picture in China and Europe.
What will the markets move this week?
With the Federal Reserve firmly committed to raising interest rates to tame inflation, even at the cost of a slowdown in economic growth, investors will focus on Friday's jobs report on the labor market. US equity investors will continue to reposition their investments after Friday's sharp sell-off that wiped out any modest gains for August. We will be closely watching Eurozone inflation data this week after European Central Bank (ECB) officials backed the intention to raise interest rates next month. Meanwhile, China's PMI data is expected to point to continued weakness in the world's 2nd-strongest economy.
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Disclaimer:
This information is marketing material and does not present investment consultation, advice, investment research, or investment recommendation. The information is valid as of the issue date of the marketing material and may alter in the future. The value of the units in the collective investment schemes changes over time and it could be higher or lower from the value at the time of the investment. No profits are guaranteed and risk exists for the investors to not receive the full amount of their investments. Investments are not guaranteed by a guarantee fund which is created by the country or another form of guarantee. Information on the performance of the financial instruments in the past is not a reliable indicator for future performance. Therefore, it is recommended for investors to acquaint themselves with the Prospectus and the Document with key information for investors before making a final investment decision. You can find these documents in Bulgarian on the website of Compass Invest - www.compass-invest.eu, and you can request and get a free paper copy at the office of the management company at: Sofia, 19 George Washington Str, floor 2, during every business day from 9 am to 5 pm. Future results are subject to taxation, which depends on the personal situation of each investor and may change in the future. A summary of the rights of the investors is available at the following hyperlink in Bulgarian: here. The mutual funds, which are managed by Compass Invest, are actively managed without following an index. We would like to inform you that Management Company Compass Invest can make a decision to terminate the offering of funds on the territory of the Republic of Bulgaria. The investment in units of mutual funds, in addition to benefits, carries certain risks like: liquid, operational, interest, currency, and political risk, as well as macroeconomical risk, currency risk, concentration risk, etc. The full information about risks can be found in the Prospectus of the respective fund.
Risks:
Despite benefits, the investment in shares of mutual funds brings certain risks like:
1) Market risk with the following components: a) interest risk related to a decrease of the value of the investment due to a change of the interest rates levels b) currency risk related to a decrease of the value of the investment, denominated in a currency which is different from BGN and EUR c) price risk related to a decrease of the value of the investment in the case of unfavorable changes of the market’s prices;
2) Credit risk – related to a decrease of the value of the position in the case of unexpected events with a credit nature which are related to the issuers of financial instruments, the counter side of exchange and OTC transactions, as well as countries, in which they operate;
3) Operational risk – from errors or flaws in the system of the organization
4) Liquidity risk – in case of forced sales of assets under unfavorable market conditions;
5) Concentration risk – in case of incorrect diversification of exposures to groups of related clients, from the same economic branch, geographic area, etc.
6) Position risk which is related to the change of price of a certain instrument in result of factors related to the issuer or in case of a derivative instrument – related to the issuer of the base instrument;
Additional information for the risks can be found in the Prospectus of the respective fund, which is available here: www.compass-invest.eu