Market's evolution 07 of March to 11 of March 2016
Monday, 14 of March 2016
The markets remained flat over the week, expectant to the conclusion of the Governing Council of the ECB that took place last Tuesday.
As expected, the ECB decided to move tab and expand its asset purchase program in order to boost the revival of the economy in the Euro Zone. This time Draghi decided to trim back the refinancing rate to +0,00% versus the +0,05% above, as well, the deposit rate was lowered by 10 basis points to -0,40%, and the asset purchase in quantity and classes expanded assets (including first-time purchase of corporate bonds).
Also, the President of the European Central Bank took the opportunity to make a critical about the need for efforts from the constituent member countries of the European Union with the main objective of increasing productivity, employment and to boost inflation. In addition, future rate cuts were discarded.
Pending Janet Yellen take the baton to the ECB next Wednesday 16th, the US equity markets fluctuated according to the statements in the Euro Zone made by Mario Draghi. In a week in which the publication of macro data was scarce, markets are now set in the spotlight at the hearing that will provide the president of the FED following the Open Market Committee, in order to analyze the statements concerning the current situation of the US economy, growth forecasts and the reference rate decision.
In Asia, we highlight the alarming data published concerning the ratio of debt to GDP, which is at +200%, and the deteriorated trade balance (which showed a surplus of 32,590 million USD against 51,000 million expected) due to the new -25% fall in exports. In addition, foreign exchange reserves could be located at least since 2011 according to published data (factor that would hinder the scope for action by the Chinese authorities).
As for Japan, we did not observe upturns in activity levels and consumer confidence continues to be impaired. The reference factor during the week will be the BOJ meeting on Tuesday 15th, after which we expect new monetary policy measures to be carried out.
The bullish market of the S&P500 celebrated its seventh birthday and was celebrated with increases of +1% (now at levels of 2.022), while the Nasdaq Composite closed flat around the 4.748 (+0,67%). In Europe, the closures were mixed, while the IBEX 35 scored a +3% (9.090), the German DAX closed flat at 9.831 (+0,07%) and the FTSE100 with cuts of -1% despite the new advances made by the barrel of Brent.
ECB’s decisions had an strong impact on the currency market causing high levels of volatility, first encouraging the appreciation of the dollar against the euro after announcing new expansionary measures, and finally it ended with an appreciation of the EUR with respect to the USD of +1,30% after announcing that rates were not going to be lowered again, closing the week around the 1,115 EUR/USD.
As for commoddities, the barrel of Brent continued recovering ground overcoming the barrier of 39 USD/Brent. The drop in weekly crude inventories in the US and expectations that on the 20th the oil producers could agree to freeze production, acted as catalysts in the price of the commodity.