Market's evolution 18 of January to 22 of January 2016

Market's evolution 18 of January to 22 of January 2016


The turmoil continued in the markets, even so, markets turned around and regained ground after the conference made by Draghi after the soft message sent showing support to the eurozone economy as well as the recovery in oil prices.

It’s important to highlight the World Economic Forum held in Davos last week, the topics of discussion were several, but where there was more expectation, was about topics regarding to low oil prices, the economic situation of China and the questionable effectiveness of the monetary policies carried out by Central Banks.

In the Euro Zone, despite the bad macroeconomic data (among which we include a reduction in consumer confidence and manufacturing PMI levels), Mario Draghi spun markets with the message of calmness after the meeting of the European Central Bank. It was agreed to keep rates at the + 0.05% (at historic lows) and noted that monetary policies be adapted to the needs of the economy and growth.

As a result, we have observed a decline in the EUR against its major counterpart, closing at 1.0794 EUR / USD after markets advanced further monetary easing. With respect to the vision of the analysts, some of them have already set the target price at 0,95 EUR/USD.

JP Morgan made a downward revision in growth forecasts for US growth expectations established up to +2%, and the IMF revised down the outlook for global growth to +3.4% from the previous +3.6%. The macro data releases were mixed, having been improvements in leading indicators of manufacturing activity and, on the other hand, falls in price levels.

As far as Asia is concerned, after the meeting of the BOJ in Japan we have seen an increase in internal pressure for new expansionary measures. The reduction in activity in the Chinese economy is having a negative effect on the Japanese economy (its main trading partner), as we have seen with levels below those expected in the various indicators of manufacturing activity.

The Asian giant is still pending to the evolution of the activity after receiving new capital injections in the interbank market. Concern over the situation remained latent in the markets and the number of articles talking about the consequences and negative effects that a deep sharp in the growth of China could have on the global economy is increasing.

The weekly balance in the leading stock markets ended in positive, recovering some of the ground lost so far this year. In Europe, the selective EUROSTOXX50 closed  with a +2,40% at 3.023 levels, the English selective FTSE100 could also benefit from the positive trail in the markets and especially the recovery in oil prices, even so, the rebound was below the +2%. In the US, the Nasdaq Composite rallied +2,29%, while the S & P500 could only score a + 1,41% closing at 1.906 levels, even so US markets continued maintaining levels above their fair value.

As for commodities, the remarkable rise of +11.20% closing at levels above support at 30 USD/Brent, throughout the week we will be watching out if it can maintain the positive trend and the evolution in markets for materials premiums.