Market's evolution 21 of November to 25 of November 2016

Market's evolution 21 of November to 25 of November 2016


Last week we kicked off the holiday season in the United States with the celebration of the Thanksgiving Day last Thursday and Black Friday on Friday, in which markets remained partially closed.

Just weeks after the Fed's meeting, markets followed closely the minutes published by the Federal Reserve (announcing the strength of the US economy) and the published macroeconomic data, which has been especially positive. This led to increase the probability that the FED initiates the type normalization. The update of the PMI manufacturing maintained the expansive levels (53,9% above the previous and the expected 53,4) while the consumer confidence rebounded to 93,8 from the forecasts of 91,6. Also, orders for durable goods rose up a +4,8% compared to the +1,5% expected, factors that supported a positive expansion of growth in the region and supported new rises in reference rates. However, the data on the evolution of sales during the days of Black Friday and Ciber Monday will be closely monitored.

Markets posted gains of +1,45% in the S&P500 reached new all-time highs (at levels of 2.219) and in the technological Nasdaq Composite (closing around the 5.398).

In Europe we did not follow the American positive wake, the proximity of the Italian referendum (next 4th Sunday) and the risk of the victory of the "no", since it would very probably lead the Italian people to call new elections, Markets and led the IRT of the Bund to score new lows. With regards to the situation of the Italian banking sector, we expect falls in the European financial sector to be reduced in view of the apparent agreement for the capital increase of Monte dei Paschi di Siena.

As for the latest statements made by ECB members, we saw no agreement in a week in which the German finance minister called for the start of the expiration of QE while Peter Praet (ECB's adviser pointed out the numerous Uncertainty highlighting the maintenance of support of the monetary policy of the Central Bank on the Euro Zone).

From Asia, we had the confirmation of China's credit rating on A + and the improvement in investor sentiment. Positive data also for Japan with a slight rebound in wholesale sales in October (+0,2%). This, together with the US trend, led Asian markets to close with gains of +2,30% in the Nikkei225 (around 18.381) and +1,70% in the Hang Seng (in levels of 22.723).

However, in Europe, the closures were flat in face of the scenario in which we find ourselves. The STOXX50 went up by +0,91% (closing around the 3.048), while the IBEX35 closed at around the 8.674 (+0,60%) and the DAX30 at levels of 10.699 (+0,33%).

In terms of currency, the Dollar maintained its strength against the Euro at levels of 1,0584 EUR/USD, while the pound rebounded near a +1% against the Euro (now around 0.8499 EUR/GBP) .

Regarding commodities, the weekly balance for crude oil was positive since at the beginning of the week, Russia was opened to cut production levels by rebounding up to 53 USD/Brent. But the situation reversed after declining to know that neither Saudi Arabia nor Russia would attend today to the resume negotiations for the freezing of production rates.