Market's evolution 25 of January to 29 of January 2016

Market's evolution 25 of January to 29 of January 2016

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Central Banks monopolized the week again with their appearances and actions taken after the meetings, setting aside concerns about oil prices.

For the countries of the Euro Zone, there have been numerous references. As regards the Kingdom of Spain, we are still in the spotlight following the recent political developments and the uncertainty that this is creating in markets, which may adversely affect growth prospects. The European Commission noted as a major risk the high levels of indebtedness.

As for the European side, the data published in recent sessions was mixed. Despite the fall in German business confidence indices and the cuts made to the growth expectations for 2016 (now at + 1.7% from the previous + 1.8%), the most notable factor was the recovery in levels Prices (CPI + 0.4% today, in line with expectations and higher than previous data + 0.2%), which is a very positive fact for the development of the economy.

Undoubtedly, the appearance of Janet Yellen after the Federal Open Market Committee was the most followed event last week because of the uncertainty regarding markets. Even so, the president of the Federal Reserve failed to reassure investors after announcing that the expansion of economic activity is expected to continue to be moderate, burdened by low price levels. However, he continued emphasizing the good performance of the labor market and said that the next steps of monetary policy would continue maintaining an accommodative tone. Macro data again denoted weakness in the economy after significant drops in orders for durable goods and investment levels.

The picture for Asia was not much better, Japan continues suffering from the lower activity in the Chinese economy, so Kuroda (governor of the Bank of Japan) surprised markets by setting negative interest rates. As a result, the JPY depreciated strongly about its major pairs, a factor that could favor exports.

In China, new interventions made by the Popular Bank included injections of liquidity into the economy through market operations in order to counteract the continuing outflows from equity markets in the region.

The equity markets now apparently uncorrelated with oil prices following the strong rebound, closed scoring slight rises in Europe. The European benchmark of reference rebounded by + 0.72% and managed to maintain the levels above 3.000, the FTSE100 was undoubtedly the greatest benefitted from the recovery of oil despite the rebound was over the +3% (closing at 6.083). In the US, the trend was the same, the S&P500 staged a rally +1.75%, while the Nasdaq Composite ended flat at 4.613. In Japan the principal index boosted a +3% encouraged by the support of the Central Bank.

Relief in commodity markets after the upturn of +8% in the oil prices due to the apparent willingness of some OPEC members to undertake measures to support the price of a barrel of Brent.

As for the major pairs, it is worth noting the loss of the JPY due to the publication of some bad economic data and the action taken by the BOJ establishing types with a negative sign, the closure of the pair was around the 131,20 EUR/JPY. The EUR/USD is by the moment channeled without great variations between the 1,079 and 1,083 EUR/USD levels.