Market's evolution 14 of November to 18 of November 2016
Monday, 21 of November 2016
Week of transition and reflection in the markets. After the US elections, the main selectives floundered as both the FED’s and the ECB’s members came to the media as well as OPEC's top energy ministers.
In contrast with the previous week, we did not have events of great relevance. However, we have been following closely the trend of the currency, especially the dollar after appreciating 2,44% against the EUR, closing at levels of the 1,0585 EUR/USD, due to rising expectations about a rate hike made by the FED. In fact, at the last conference offered by Janet Yellen, new delays in rate normalization were ruled out because of the risk that could be expected to sustain them with the recent improvement in the labor market and strong inflation expectations. In this line, Goldman Sachs forecasted a rate hike in December and three more over the next year.
The evolution of the US macroeconomy maintained the positive trend with further reductions in weekly claims for unemployment benefits (current 235.000 vs. the 257.000 expected). With this, Atlanta’s Fed decided to increase growth forecasts for the US during the fourth quarter of this year up to +3,6%.
US equity markets ended up making slight gains in the Nasdaq Composite after closing at levels of the (+1,61%) and around the 2.181 in the S&P500 (+0,81%).
In the Eurozone, despite the United States, we were still waiting for the collapse of the Italian banks, a factor that dragged the sector of the Eurozone as a whole and raised fears of the Italian referendum and volatility spike. As we are getting closer to the date when it will be decided whether the Italian citizens vote "YES" or "NO" for the constitutional reforms proposed by Matteo Renzi (Prime Minister of the country), the news event negatively affects the Government bonds since this implies rebounds in risk premiums in peripheral countries.
The closures in the European parquets were flat; The IBEX35 around 8.622 (-0,19%) accumulating a fall of -9,65% YTD, the STOXX50 at levels of 3.020 (-0,30%), while the DAX30 did in the 10.664 (-0,03%).
As for the major pairs, as we mentioned at the beginning of this market summary, the Dollar recorded new gains against the euro anticipating a rate hike at the next Fed meeting. As for the pound, it managed to recover some ground on the common currency (now around 0.8581 EUR/GBP).
Regarding the evolution in the Asian continent, it was announced the update of levels of the annualized Japanese GDP, which surprised with an upward trend by +2,2% compared to forecasts of +0,9%, just as production levels Industrial with advances of +0,6% (compared to the +0% expected and previous advances). Positive data also in China where the advances in industrial production went up by +6,1% in line with expectations of (+6,2%).
The selectives, however, closed mixed with gains of the Nikkei +3,41% around the 17.967 while the Hang Seng closed flat at levels of the 22.344 with slight cuts.