Market's evolution 14 of March to 18 of March 2016
Monday, 21 of March 2016
The Central Banks of Japan and the United States did not move tab at the meetings held. Markets remained expectantly regarding to the uncertainty among monetary actions that would be decided to carry out, especially those announced by Janet Yellen.
After the Open Market Committee of the Fed that took place last Wednesday, it was decided to keep unchanged the interest rate benchmark from a range of 0,25 to 0,50% after considering a negative Outlook adding special emphasis on the global risks. However, the prospects announced for the evolution of the economy, inflation and the US labor market situation remained positive, so at the next meeting in April a new rate hike could take place.
As a result of the dovish message from the Fed delaying the rate hike, the euro appreciated closing at levels of 1,1267 EUR/USD. This could adversely affect the exports from Eurozone since now the products would become more expensive in relative terms.
The weekly trend for Europe was particularly agitated waiting for the vision of the global economy offered by the president of the Federal Reserve and decisions. We had relevant macro references and a new report published by Moody's in which they carried out an analysis of the Eurozone. While the above macro data pointed to higher levels of industrial production and slight improvements in price levels, the vision offered by Moody's announced an increase of the existing political risks in the area and warned about it.
In this situation of uncertainty, Kuroda surprised investors by not including new measures of expansionary monetary policy in his speech. By contrast, the BOJ president acknowledged the weakening of the Japanese economy, especially due to lower external demand. As to the published data, the recovery in orders and factory machinery, could point to a recovery in the Japanese manufacturing sector. In contrast, the economic development of its trading partner (China), presented an important deterioration despite the authorities continued maintaining strong growth expectations at levels of 6,5-7%.
Equity markets closures were mixed, highlighting the advance of +1,22% in the German DAX (in 9.950, to 50 points of its resistance located in 10.051), while the European selective EUROSTOXX50 and the Spanish IBEX 35 closed with declines of -0,50% (now at levels of 3.059 and 9.051 respectively). On the other hand in Wall Street, advances were widespread due to the absence of new measures to standardize types, being the gold and precious metals, energy and industrial the most benefited sectors.
As far as commodities are concerned, the advances were widespread, led by coffee with a rise of +7,60%. Also, oil scored a +2% recovering levels of the 40 USD/Brent benefited from expectations of a greater willingness of the producers to stabilize production (and therefore the prices of the Brent).