Market's evolution 25 of April to 29 of April 2016
Monday, 02 of May 2016
The strong levels of correlation that have presented so far the equity markets with oil prices appeared to be weakening. After months observing the strong relationship between those two assets, it may not be very intuitive the correction that major selective have suffered if we consider the rally starring the commodity.
As we announced equity markets have corrected especially in the Eurozone, up to a -3,60% in the EUROSTOXX50, the DAX stood at levels of 10.038 (-3,22%) and the IBEX 35 quoted around the 9.025 (-2,20%). The reason is found in the weakness of the macroeconomic data; further declines in price indices (CPI Eurozone -0,2% today about the + 0% previously), levels of consumer confidence, as well as the development of sales of the main motor of Europe (Germany). As the leaders of the ECB, we still find a consistent thread in the discourse of the different members, a factor that must be added to the inability of reaching agreements concerning the untenable situation of Greece and the bad quarterly results that have been reported from European companies.
From across the ocean, the picture does not look better, at least not after the new quarterly GDP growth data was made public (disappointing downward with +0,7% from the previous figure of +1,4%), factor that led to sharp declines for the main country. The technological NASDAQ COMPOSITE was the most penalized selective closing at levels of 4.775 (-2,67%).
Similarly, we also followed closely the measures mentioned by the Fed after the conclusion of the Open Market Committee in April. No policy changes were made despite the strength that the labor market continued showing, mainly due to the moderation in household consumption, the fall in exports and the inability to boost price levels.
From Asia, equity markets closed in red, especially the NIKKEI225 with a drop of -5,16%, now trading at levels of 16.666. Regarding the country included the appearance of Kuroda (President of the BoJ) after the meeting held last Thursday. There were made no new easing measures in Japan despite the cuts made in forecasts about growth and inflation. This led to a strengthening of the Yen and widespread falls in equity securities.
Regarding the commodities market, the price of Brent continued its consolidation process and it is trading now at levels of 48,13 USD/Brent (+6,70%) levels approaching the 50 dollars per barrel of Brent. We identify as well new developments in the gold price, now quoting at 1.293 USD/Oz.
Thus in currency markets, in addition to the progress of the yen against the common currency, it is noteworthy new blips in the EUR/USD and EUR/GBP. The sharp drop in the US GDP data negatively affected the dollar so (now trading around the 1,1454 EUR / USD).