Market's evolution 07 of November to 11 of November 2016

Market's evolution 07 of November to 11 of November 2016


Donald Trump hoarded headlines and media covers, becoming a viral issue within our social networks. The victory of the Republican candidate in the elections that took place in the US last Tuesday surprised the markets, since the victory discounted was the one of Hillary Clinton.

The turmoil in the markets was served, both within the surveys and the polls conducted was positioned as the winner the Democratic candidate. In fact, it was not until the last moment that Trump began to climb positions to finally be the elected presidential candidate of the United States. This initially affected negatively the markets, with the Nikkei225 being the selective that suffered greater cuts with a drop of -5% during last Tuesday.

With all this, the situation in the US seems to remain robust, Alan Greenspan (former member from the Fed) announced new signs of increases in inflation levels, so he anticipated further rate hikes. In the same vein, the statements made by the current members from the FED maintained the positive sentiment for a rate increase. Updates of requests for unemployment benefits were lower than expected (254.000 requests). Those factors led the dollar to reach levels of 1,085 EUR/USD, rising +2,56%.

As for the selective ones, the gains were generalized, with rallies of +5,36% in the Dow Jones (standing at maximum levels around 18.847) and of +3,80% in the S&P500 quoting around 2.164. The sectors that benefited the most was the Biotechnological one (+10%), followed by Financials (+7%) and Healthcare (+4,63%).

We must highlight as well the upturn in Treasury yields (up to +20% after moving from the IRR of +1,828% to +2,23%) due to the sell-off of US bonds.

In Europe it was Draghi who took care of calming the nervousness in the markets stating that the rates will remain low within a long period of time. Regarding the macroeconomics, we do not highlight relevant updates, so the markets fluctuated following the North American track. In fact, the most significant reference was the cut in the European Commission's growth forecasts of +1,6% from the previous data of +1,9% due to the downward risks that the Brexit could bring.

Markets closed mixed, being the DAX the selective that advanced the most (close to +4%), now around 10.667, followed by STOXX50 with a rebound of +2,56% recovering levels of 3.000. In contrast, the IBEX35 suffered cuts of -1.73% (around 8.639).

From Asia, the yen maintained its strength acting as a safe asset. No surprises in the macro part. China maintained a positive performance, car sales continued strong at +20%, which holds the optimism regarding the growth of the Asian giant.

Markets closed mixed with gains of +2,80% on the Nikkei225, while the HangSeng closed flat around 22.531.

As for commodities, the Barrel of Brent failed to maintain the levels of 45 USD/Brent in the face of the apparent disagreement of carrying out freezes in production levels within the OPEP member countries. Regarding the gold, cuts were up to -6% after the question of the US presidency was cleared.