Market's evolution 21 of September to 25 of September 2015

Market's evolution 21 of September to 25 of September 2015

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Tragic week for equity markets. Finally resolved all the uncertainty about the Greek elections and the decision on interest rates in the US economy, it was because of the noise created by the group Volkswagen what hit the markets last week.

Last Tuesday was known that the group was in trouble because of irregularities related to emissions of nitrogen monoxide and CO2 in those cars distributed in the United States, so that Volkswagen was accused of tricking the test emissions in some of its models causing sharp declines in the price of the company (over -40% in just two days). As a result, the volatility followed latent in the markets, especially for those of the automotive industry, dragging the German DAX.

Attending to the macroeconomic data in Europe, the focus side was put in Spain after Sunday’s elections and the risk of a “corralito” mentioned if the independence was carried out in Catalonia. Finally, the chapter ended with the victory of the pro-indepedence party Junts Pel Si, instead they did not reach the 50% of the total votes. Positive macroeconomic data published during the week, despite this, Draghi took the appearance on Wednesday after the Economic and Monetary Committee to say that monetary policy needs to be subject to the economic cycle. 

Now is December. The economists from the Bank of America said that it will be next December when interest rates will be raised as Janet Yellen Suggested last Thursday. Published data concerning the labor market remained positive after the reduction in unemployment benefits. The effects were positive for the dollar, which has been appreciated nearly a +1% and trades around 1,13 EUR/USD.

At a global level, Citigroup reduced the global growth outlook for 2015 to +2,6% from the previous +2,7% because of the risks that China’s global slowdown supposes as well as the existing deflationary conditions. This has been supported by the release of disappointing data on Chinese manufacturing PIMI below levels of +50 (+47,5 actual vs +47 expected). This data points out a contraction of this economy. 

Signs of weakness as well in the Japanese economy despite the rise in the index of producer prices, which would point to an end of the deflationary stage of Japan’s economy.

European stock markets finished the week with sharp declines after the “scandal” of the mainly German carmaker, as well as the profit warning issued by the Finnish steelmaker Outokumpu related to a decrease in expected profits, which detracted from the behavior of some companies of the sector like Arcelormittal. Falls in European equity markets became over -3,40% during the week in the case of the Spanish IBEX35 and over -2,32% in the German DAX.

The North American selectives did not much better, reaching drops up to -3% for the Nasdaq Composite, mainly because of sales of securities in the health and biotechnology sector.

Through the week, crude oil prices gained ground after recent falls. Now, the barrel of Brent is traded around the 48,60 USD/Brent. Recoveries as well in the gold price which is traded around 1.145 USD/Onz.