Market's evolution 04 of January to 08 of January 2016

Market's evolution 04 of January to 08 of January 2016


The markets turned deeper into red during the past week in the beginning of the year, which has been negatively affected by the destabilizing factors located in China after taking place the ninth devaluation of the Yuan.

In the Eurozone, the equity markets were driven by cuts in Asian markets up to -8.69%. Falls have been produced as well in the yields of government bonds in the Eurozone, which have become a refuge assets again. In addition, we have found evidence supporting the improvement of the economic situation of the Union after the publication levels in manufacturing PMI in levels of 53.2 (above expansion levels set in 50) and the support that the ECB will continue providing in order to facilitate the smooth running of the economy.

In the US, the situation in the markets has not been much better since it also suffered important losses. In addition, we have had some bad manufacturing PMI data, which in addition with the publication of Citigroup pointing out that US equities should be underweighted, and growth previsions made by the Federal Reserve Bank of Cleveland for 2016 set between +2,5% and +2,75% alerted the investors. 

Despite these data, the focus is now placed in Asia, particularly in China, where the last week it had to apply the freezing mechanism of contributions by sharp falls in stock markets when publishing a bad Manufacturing PMI data (48.2 levels), which made the markets anticipate lower corporate earnings and led to sharp cuts in the stock markets. This was repeated at the end of week after a devaluation of the reference currency, alarming about the possibility of an abrupt slowdown of the giant.

The equity markets left significant losses in recent sessions. European markets suffered cuts of up to -8.86% in the case of the German DAX, and a -7.43% in the Eurostoxx50. In the US, the trend has been negative as well with cuts of -7.54% in the selective technological NASDAQ COMPOSITE, which closed at levels below 5.000, and -6.15% in the S & P500. The Japanese benchmark index suffered cuts of -7.28% despite the good PMI data presented in the region.

As for currency, although the USD started the week recovering ground, the weekly balance has been positive for the common currency after the good data released by the zone and the disappointing results posted on the PMI US. The pair closed the week at levels of 1.0929 EUR/USD and the minimum reached stood at 1.0809 EUR/USD.

In commodity markets Brent crude hit a new low in a context in which the relationships between the main producing countries are not at their best. The price of the commodity has left a -10.54% closing at levels of 33.55 USD/Brent having hit a new low at 32.16 USD/Brent.