Market's evolution 19 of September to 23 of September 2016
Monday, 26 of September 2016
Once again Central Banks have been in the spotlight of investors during a week in which the movements have followed closely the statements made by the main leaders of the largest geographic areas.
In fact, it was the Federal Open Market Committee and subsequent statements made by Janet Yellen (president of the FED) according to the rate decision which captured the interest of the markets. After the vote of the Committee, it was decided to keep the reference rate unchanged (between the range of +0,25% and +0,50%). The reason is found in the weak levels of growth, where growth forecasts were reduced up to +1,8% and the inability make inflation rebound. However, the labor market continued to strengthen, as shown in the latest data of weekly requests for unemployment benefits (252.000 in contrast to the 262.000 expected), and seem to improve wage levels and domestic consumption.
In contrast, the lack of private investment and the inability to make prices rise up is bothering the Federal Reserve, which decided to maintain the accommodative policies, leading to major selective to make modest progress. The Nasdaq Composite closed around levels of 5.305 after scoring a +1,17% as well as the S&P500 which did so around the 2.164 with increases of +1,19%. In the same line, the dollar lost ground against the EUR after ruling out the possibility of a rate hike, driving the currency to close around the 1,1222 the EUR/USD.
From Asia, Kuroda came "to the rescue" of the Japanese economy.
Following the meeting of the BOJ the reference rate has been kept at -0,1% although further expansion of the money supply was announced. Similarly, the purchase of government bonds was reported in order to control the yield of the 10-year bonds at levels close to the 0%.
The effect this had on the markets has been positive, leading the Japanese selective to restore a +1,42% after closing at 16.754 levels. As far as for currency is concerned, the yen remained strong against the euro, contrary to what we might have expected (now trading close to the 113 EUR/JPY levels).
Finally, we have noticed new signs of weakness in the Eurozone. In one hand, the OECD reduced once again growth forecasts to +1,5% for 2016, while the last fall in the composite indicator of economic activity did nothing but discourage the investor sentiment.
This was not reflected in the main selective, which despite the downturn suffered on Friday, closed with blips over the +3% in both; the STOXX50 (now at levels of 3.032), and the German DAX (closing around the 10.626).
Finally, for the commodities market, flat closures in the price of the Brent after the sharp fluctuations that the raw material suffered within the week. The reason lies on the statements made by the major energy ministers serving a possible freeze in production, exposing his position before the imminent celebration of the International Energy Forum. The price of a barrel of Brent stood at the close to the 45.80 USD/Brent, while gold made new advances (+2%) closing at levels of the 1.337 USD/Oz.