Market's evolution 12 of December to 16 of December 2016
Monday, 19 of December 2016
Over the past week, markets have been waiting for the Fed’s declarations and the interest rate decisions.
As expected, Janet Yellen announced an increase in benchmark rates of 25 basis points reiterating the strength of the labor market and reaffirming the positive outlook to reach the 2% investment target over the medium term. On the contrary, the surprise factor was the estimate to carry out 3 rate hikes in contrast to the 2 previously planned, which pushed up the dollar by 1% leading to its main pair up to 1,0447 EUR/USD now closer to the parity. Regarding to the main selectives, the closures were flat without significant variations.
We also have important references at a macroeconomic level, among which we highlight the +0,4% rise in production prices and the fall to 254.000 in weekly unemployment subsidy requests from the 255.000 figure expected (very important indicator followed by the Fed within their monetary policy decisions).
In Europe, the selectives were favored by the depreciation of the EUR, which led to anticipate an increase in exports. Weekly closes ended with general gains of +2,65% in the IBEX-35 (now at levels of 9.412) and 1,93% in the STOXX-50 (closing at levels of 3.259).
Regarding the current situation of the Eurozone as a whole, despite the positive evolution and the favorable outlook for growth (levels in the leading indicators of activity showed expansion and consumer prices with increases of +0,60% ), the many opened fronts and uncertainty about the banking situation in Italy and the evolution of the Greek crisis slowed the progress.
From Italy, the latest news suggested that the country's government would have a contingency plan of 15.000 million euros to rescue the Italian banks with more problems in the case that the private expansion of Monte dei Paschi fails. In this line, the credit rating agency lowered the country's GDP forecasts below 1% over the next two years.
Regarding Greek developments, Eurozone creditors announced that they were suspending debt relief to Athens due to the worries over recent changes in Greece's spending measures. In response, Moscovici (European Commissioner for Economic and Financial Affairs) supported Greek Prime Minister Tsipras on the grounds that Greece had made significant sacrifices so far to improve its situation.
Without major improvements to be highlighted in Asia, Japan remained stable after maintaining expansion rates at expansive levels in the manufacturing activity. Meanwhile, in China, there were increases of +6,2% in industrial production levels and +16,6% in vehicle sales data.
Selectives closed mixed; While the Hang Seng suffered cuts of -3,25%, the NIKKEI-225 saw gains of +2,13% closing around the 22.020 and the 19.401 respectively.
The Barrel of Brent made new gains (of +1,62% now at levels of the 55,21 USD/Brent) despite the latent doubts regarding the maintenance of the agreed production quotas. The ounce of gold for its part, fell a -2% to 1,133 USD/Onz.