Market's evolution 13 of June to 17 of June 2016

Market's evolution 13 of June to 17 of June 2016


Back to liquidity. With this phrase we could summarize the current market situation due to the various fronts that still remain opened. So we close the 3rd week of June keeping an eye on the Brexit Referendum to be held on Thursday.

The fear of a possible departure of the UK from the European Union, pushed down to the main European indices. Similarly, gold (safe asset) rebounded to levels of 1.298 USD/Oz., as well as prices of European, USD and Japanese bonds did, now presenting TIRS at minimum, even negative.

However, despite the closures with a negative sign, markets turned upward at the noise generated by the murder of Jo Cox (British MP). The European selective EUROSTOXX50 closed with cuts of -2% now around levels of 2.849, in line with the German DAX (now around the 9.631).

Regarding macroeconomic developments, economic data continued improving after posting slight rises in price levels and production (+0,4% from the expected +0,3% for both cases). However, we must not lose sight to the insistence of Lagarde (from the IMF) before the rise of populism and the scarce political unity in the Euro Zone, pointing out to one of the biggest crises faced by the Eurozone.

Regarding the US, the most important weekly fact was the meeting from the Federal Open Market Committee and subsequent statements made by Janet Yellen. Interest rates remained unchanged with no schedule to carry out a rate hike, being relegated to the evolution of macroeconomic data. In addition, growth forecasts were reduced to +1,6% from the previous forecast of +1,8%.

In the same vein, the falls in production levels and increases in weekly claims for unemployment benefits (now 277.000) were recorded. The equity markets reacted negatively to bad data published and caused cuts of -2% in the Nasdaq Composite and up to -1% in the S&P500 (now at levels of 4.800 and 2.071 respectively).

For Asia, we must point out the possibility that China cuts its interest rates to support economic growth, with the greatest concern to the high levels of total debt (supposing a 237% of the GDP).

Fitch kept an A rating for Japan, despite that the outlook assigned was negative given the lesser reliance on the BOJ in maintaining the financial stability. In its monthly meeting, the BOJ kept monetary policy unchanged. The yen maintained its strength shown over the last week, now trading at levels of the 117 EUR/JPY, putting downward pressure on the Japanese index in anticipation of a falls in exports.

As for commodities, we highlight the correction in the price of Brent (-2,71%) unable to maintain levels of the 50 USD/Brent.