Market's evolution 22 of February to 26 of February 2016
Monday, 29 of February 2016
The possible departure of the UK from EU monopolized the top headlines in the newspapers in recent days. As a result of negotiations between the European Union and the UK, the pound suffered cuts despite David Cameron (Prime Minister of the United Kingdom) came out in favor of remaining within the Union, discrepancies and lack of consensus in the country continued preoccupying the markets. The reference dates will be on 17th and on 18th of March (elections to the European Council), on May 5 when local elections will take place, and on June 23 being the date chosen to celebrate the referendum that will determine the departure or the permanence in the EU.
Other fronts could harm the evolution of the European economy; the refugee crisis and the interest rates near zero, plus the apparently forgotten Greek crisis. The latter one mentioned, reappeared in the spotlight following statements made by the Governor of the Bank of Greece alluding to the possibility that GDP growth could be negative for the first half of the year, and we should not forget that Greece must repay 2.250 million of euros to the ECB on 20th of July. References published did not contribute to create more optimism, the manufacturing leading indicator fell to 51 from the previous figure of 52,3, and the consumer confidence was in negative territory and below expectations.
As for the United States, confusion grew after the disparate views of some members of the Fed regarding the US economic situation and future monetary policy actions. The most notable would be the one from James Bullard who described as reckless carrying out a rate hike attending to the hard pressure to low price levels, while Loretta Mester mentioned as feasible a rate hike in March. As far as economic data is concerned, it should emphasize the positive data of the Q4 GDP which stood at +1% compared to the + 0,4% expected and + 0,7% previously.
By contrast, references in Asia were scarce. The published data indicated generally a deteriorated economic situation after the fall of business sentiment and consumer in China and, despite the capital injections into repos and structural changes that are taking place, Lagarde from the IMF continued showing great concern given the need for reforms to stabilize the Chinese economy.
Equity markets continued with rallies of + 2% in the case of European selective Eurostoxx50 which supports were maintained and closed around the 2.929, while the DAX30 after scoring a + 1,33% closed around the 9.513. The reference levels of the selective would be the support existing near 8.650 which, if broken down, would indicate a change in trend. Closures were also positive on Wall Street. Despite the bad macro data releases, the Nasdaq Composite managed to sign up about a +2% and the S&P500 staged a progress of +1,60% closing at 1.948 levels. In the same vein, the Japanese NIKKEI225 ended the week at levels of 16.188 with rallies of +1,40%.
As mentioned, in currency markets, the pound sterling was weakened by the risk of BREXIT, leading to a depreciation of the currency close to 2% over the EUR. However, the dollar regained ground relative to its currency of reference closing the week at 1,0931 EUR/USD (-1,80%).
With no significant variations in the price of the ounce of gold. The main beneficiary in the commodities market was the barrel of Brent, which ended the week at levels of 35 USD/Brent after scoring a + 6,33%.