Market's evolution 14 of December to 18 of December 2015

Market's evolution 14 of December to 18 of December 2015

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Week of vital importance for the financial markets following the decision of raises in the interest rates performed by the FED. Markets were boosted after the recent uncertainty and the high volatility.

Although the Eurozone macroeconomic data continued evolving positively (with the leading indicators above levels of expansion and price and production levels exceeding those proposed by the consensus of analysts), and the positive outlook that Mario Draghi reported regarding the effectiveness of monetary policy did not match the vision of Angela Merkel, who insisted on highlighting the mistakes of foundation of the Euro Zone as a lack of fiscal, financial and political integration.

As far as the US is concerned, after having the world waiting for the final decision during months, the Federal Reserve finally carried out the expected interest rate normalization giving a message of economic recovery of the US economy. The reference rate stood at a range of +0,25% to +0,50%. Also, future increases announced will have a gradual and prudent character. In terms of growth expectations, those were placed in a range of +2,30% to +2,50% from the +2,20% and +2,60% forecasted earlier.

In Asia, last Thursday during the BOJ’s meeting budgets for social purposes were enlarged as well as the total amount of aid intended to the agricultural sector. In addition, a new QE program of 300.000 JPY was announced with the objective of boosting the growth of the economy. From the Chinese Academy of Social Sciences, the growth forecasts for 2016 were lowered next to the +6,80% discarding a hard landing of China.

Concluding a week of high volatility created by the decision made by the FED and the expiration of future contracts, although equity markets experienced a strong momentum after rising the US rates, the week ended mixed. We highlight the advances of up to +2,56% for the German DAX (closing at levels of 10.608), while the less benefited was the Spanish selective of reference after scoring a +0,89% of advance. In the US, the balance was not as good at the end of Friday with widespread falls, the S&P500 closed flat at 2.005 levels (-0,34%) as well as the Nasdaq Composite around the 4.923 (-0,21%). In the same vein, in Japan the Japanese index suffered cuts of -1,28% ending the week at levels of 18.986.

As expected, the currency market has witnessed an appreciation of the USD against its major pairs and despite which reached levels of 1,0799 EUR/USD, the weekly closing levels stood at 1,0865 EUR/USD.

As for the commodities market throughout the week oil reached new cuts reaching levels of 36,33 USD/Brent, worrying investors again after a week in which the commodity has suffered further declines of -2,81%, now quoting at levels of 36,88 USD/Brent. As for the ounce of gold, cuts have been softer; of -0,81% (trading now at levels of 1.065 USD/Onz.).

For the next week, we will keep on eye the Spanish general elections after the victory of the Popular Party on Sunday’s elections and the effects that this might have on the financial markets.