Market's evolution 11 of January to 15 of January 2016
Monday, 18 of January 2016
The markets ended the week in red negatively affected by continued declines in the Chinese selective and the negative trend in oil prices, but it was the poor macroeconomic data released in the United States what dragged European markets closed with heavy losses.
In Europe, we continue pending to the recently mentioned Brexit and the political uncertainty in Spain following the election of new president of the Generalitat. As for the statements, we have heard from members of the ECB that most members are opposed to further increases in the QE program. Meanwhile, the asset purchases made by the ECB which are still active, have been raised amounting to 499,902 mlns of EUR. As far as economic data are concerned, the balance resulted with a drop in production levels and further falls in price levels. As for the UK, at the meeting of the Bank of England, it was decided to keep the reference rate at + 0.5% positioning waiting for gradual rate hikes.
The US economy again suffered devastation by constant reductions in the price of oil and the bad macro data releases, showing declines in retail sales and sharp cuts in manufacturing indexes. In the same line, the publication of the Beige Book is pointing to weakness in the manufacturing sector due to the strong dollar. In this context, we must point out the differing views of the different members of the Fed among which we note the sharp turn that have suffered the statements made, including those of Rosgren who said that the rate hike could be revised downwards pointing to a slowdown in growth.
In Asia, China is still the headache of investors, although some positive data was published on Monday regarding to exports and imports, markets continued suffering strong declines during the recent days. The uncertainty and fear of further devaluation of the Yuan has caused heavy capital outflows from the country despite the statements of Prime Minister communicating the currency will remain stable.
As far as Japan is concerned, we continue perceiving the downward pressure on price levels up to -0.3%. In addition, data published according to exports and machinery orders suffered cuts from previous data and forecasts. Even so, the improvement in the consumer confidence posted at the beginning of the week surprised the markets.
Weekly closures were again settled with negative sign in the main European indices, with the Spanish selective injured after suffering the largest cuts amounting to -4,19% and closing at 8.543, cuts in EUROSTOXX50 instead were around -2,70% below the levels of 3.000. In the US, the results of the reporting season began with profits below expectations for Alcoa, Citigroup and JPMorgan, and in line with Europe, losses were widespread for all indexes; over -3,40% in the Nasdaq Composite and -2,19% in the S&P500.
In terms of currency, without major changes in the EUR/USD, while continued progress of the common currency against the pound because of the poor macroeconomic data released in the UK.
The protagonist has been again the oil, which has lost the support levels of 30 closing the week at levels of 28 USD/Brent with cuts close to the -15%.