Market's evolution 29 of August to 02 of September 2016

Market's evolution 29 of August to 02 of September 2016


Once closed the month of August, and almost at the end of the summer period, we find out that markets appear to be slightly scrambled, still digesting the numerous references published throughout the week.

In the No. 1 we place the United States due to the bad data published within the ISM manufacturing and the latest update on Nonfarm Payrolls. Despite the numerous comments from the Fed members holding the need to carry out a rate hike after the good data published concerning the labor market, the recessionary levels published by the ISM (now at 49,4) and the slowing creation of non-farm employment, made markets hit hard by increasing uncertainty about future Fed interventions. Which affected negatively for both, currency and bond yields.

The equity markets however, became benefited due to the slightly lower expectations of a near rate hike; the S&P500 closed at 2.179 levels scoring a rise of +0,50%, while the Nasdaq Composite did with advances close to +0,60% around the 5.249.

In the second place we could set the United Kingdom with the European Union. Germany remained immovable as to the harsh consequences for UK in case it finally ends with the Schengen space and carries on with the Brexit. In response, Theresa May (British Prime Minister) reaffirmed the government's position on keeping the winning referendum decision without giving a second choice votes. As for recent data, those pointed to a slight recovery of the manufacturing activity and the construction sector, factors that led to a rebound in the British currency, now around the 0,8397 EUR/GBP after scoring a +1,46%.

As for as the Eurozone is concerned, the eyes are now set on the next ECB meeting to be held next 8th of September and we are still awaiting the formation of government in Spain, after last Friday's investment was rejected Mariano Rajoy as President of the Government.

European markets made further advances of +2,88% in the Spanish IBEX 35 selective closing around 8.900, followed by Eurostoxx50 with rallies of +2,30% reaching 3,079 levels.

From Asia we note no signs of improvement; the latest data of the leading indicator of economic activity in China, although placed in expansive levels (now 50.4), remained within the neutral zone. However, in Japan the contractionary levels of economic activity, became unable to reverse the negative trend. Consequently, the Yen closed the week at levels of 115.75 EUR/JPY losing ground against the common currency. The Japanese benchmark selective instead, closed with spikes close to 3,5% now around the 16.925.

Regarding commodities, crude was the loser of the week after the refusal from the Russian energy minister to freeze production, and the forecasts that Iraq is about to increase its oil exports by +5%. This led to falls of -6,19% placing the price of Brent at levels of 46,83 USD/Brent.