Market's evolution 23 of May to 27 of May 2016
Monday, 30 of May 2016
After Friday's closing, the markets were expectantly awaiting that the Fed’s President (Janet Yellen) clarified whether rate hikes would take place in the next Federal Open Market Committee, scheduled for next June 15.
Throughout the week, several members pointed out the possibility that 2 or 3 rate hikes could take place this year. So, the debate was served after the numerous comments from analysts and members of the Fed, where the weakness from the economy and the rising global risk were highlighted. However, the data released has been positive in general terms (GDP as expected at + 0,8% and new orders for durable goods at + 0,4%), with the exception of the fall up to 50,5 in the manufacturing PMI leading indicator. After his remarks, Yellen did not surprise the market since she came out in favor of a rate hike as long as the growth levels were maintained, although she considered worrying the low productivity levels.
From Europe, the turning point was Greece again, which after making some adjustments in fiscal policy and committing to greater austerity measures worth in 5.400 million euros, managed to reach an agreement with the Eurogroup. In result, it received an injection of 11.000 million. This, together with the statements made by Lagarde from the IMF, which were in favor of providing the funds necessary to Hellenic country, led the Greek bond yields fall to minimal levels.
Regarding recent economic data in the Eurozone, we spotlight falls up to lows of 16 months in the PMI composite leading indicator (now at 52,9). But the week presented a better tone in equity markets staging advances up to +4% in the EUROSTOXX50 (now around 3.078), the IBEX 35 (at levels of 9.107) and the DAX (around the 10.286). We emphasize the sharp falls suffered by the Banco Popular (of -30% in the week) after the board announced a capital increase and suspended the dividend pointing to possible losses in 2016.
In the same vein was Japan after updating macroeconomic indicators, manufacturing activity continued contracting, the same as retail sales price levels below expectations (+0,9% from the previous figure of +1,1%) and the BOJ governor pointing out to its willingness to carry out further measures to support the economy.
The main Japanese selective closed the week flat (at levels of 16.834), while the evolution in the US has been more positive after making increases of +3,44% in the Nasdaq Composite after closing at 4.933 levels.
As for the currency market, the Euro retreated positions from its main peers. The EUR/USD now trading around the 1,11 after suffering a decline of -0,96% while the EUR/GBP did at levels of 0.7598.
Regarding the commodities market, the Brent continued setting new advances coming back to the resistance level of 50 USD/Brent.