Following the revelations that Volkswagen’s clean diesel image weren’t all they were cracked up to be, German newspaper Autobild has reported that BMW had broken EU pollution limits in a real world test, adding to fears that cheating on US emission tests may not be limited to Volkswagen. BMW’s shares fell by 5.4%. Sentiment was also held back by US machinery company Caterpillar cutting its forecasts for earnings and revealing plans to cut 10,000 jobs. VW has set aside €6 billion to cover the growing queue of agencies set to take on the German giant, this follows on the heels of €24 billion in shareholder’s value being wiped out. The key question now is not whether Volkswagen and their 12 brand portfolio will survive this crisis intact and what of the 80,000 Irish cars that may be affected.

Dublin businesses this week were counting the losses of Paddy Cosgrave’s decision to move the coveted web summit to Lisbon for the next three years. The web summit is expected to draw more than 30,000 attendee’s this year before making the journey to Portugal. Failte Ireland have estimated that it will generate €37.5 million in revenue to the city this year. The kicker for Portugal may have been the €1.3 million they have offered to support the web summit in its inaugural year in Lisbon. Word of sketchy internet connections and exuberantly overpriced hotel room’s will no doubt have had an impact on the organiser’s decision to move to warmer climates.

Global equities had seen significant volatility during August on the back of economic growth concerns in China and the emerging markets. Last week, however, saw some further stability return to markets. Investors continue to focus on the timing of the upcoming US interest rate rise. Comments from the Federal Reserve following last Thursday’s FOMC meeting were dovish in nature – with concerns raised about weaker global growth and a stronger US dollar – pushing out lift-off until December 2015 or Q1 2016.

Eurozone bond prices were ahead by 0.5% on the week, reacting to the Fed’s concerns on global growth. Overall, eurozone bonds have given a return of plus 0.9% year-to-date although prices remain well-off their mid-April peaks. The German 10- year bond yield rose marginally from 0.65% to 0.66% last week; it had hit an all-time-low of 0.06% in April. Irish bond yields are at 1.23% a fall from last month’s 1.36%. Equivalent US yields fell from 2.19% to 2.13%.

Commodities and Currencies
Commodity prices in general were down by 1.3% (in dollar terms) last week, despite a 3% rise in the gold price, and are down by 15.6% so far in 2015.
The euro currency was stronger against most the major currencies during August, especially against the British pound and the Aussie dollar, although year-to-date the euro has been a weak currency. The €/$ rate moved from 1.10 to 1.12 over the month.

Market Sept 15