Market's evolution 30 of May to 03 of June 2016

Market's evolution 30 of May to 03 of June 2016


The week was closed with the publication of Nonfarm employment data from the United States. Surprisingly, the figure was worse than expected. While the consensus of analysts forecasted the creation of 164.000 jobs, the actual figure was of 38.000 people employed (being the lowest level since 2007). As a result, the market quickly ruled out the possibility that a new rate hike would be carried out, what turned down the dollar, equity markets and US bond yields.

With all this, despite the optimism shown by the different members from the Fed, the deteriorating economic situation is increasingly becoming evident in North America. As the OECD cut its growth forecast up to +1,8% (from the previous figure of +2%), the leading indicators of activity expectations improved as well (now at levels that separate the contractionary  levels of shock).

Thus, the weekly balance on Wall Street’s markets ended flat. The S&P500 closed at levels around levels of 2.099 (+0%), while the Nasdaq Composite did around the 4.942 (+0,18%).

As far as for the Eurozone is concerned, the vision is not better, since during the last days the risk perspective has been expanded. Mainly due to the fear of a Brexit, as well as the called risk of a "Frexit" due to the serious consequences that the strikes are provoking to the French economy.

As far as monetary policy is concerned, after the ECB’s meeting, reference types remained unchanged. As for the later statements made by Mario Draghi, it was called to the member countries from the Eurozone to carry out measures to boost productivity, investment and to improve infrastructure, in addition to launch a partition to meet the standards from the Growth Pact and Stability. The positive outlook for economic developments remained and increased growth forecast to +1,6% for the year.

As for Asia, Prime Minister from Japan decided to delay the rise in sales tax for two years because of the deteriorating economic situation. The latest data has led to investor sentiment to deteriorate in front of the inability of the BOJ to reverse the situation of economic weakness, leading to selective reference to backtrack a -1,14% over the week (now at levels around the 16.642 ).

In China, after announcement of the possibility that the MSCI includes Chinese stocks in their indexes of global reference, equities turned upward on the expectation that both ETFs and UCIs that replicate the index incorporate the shares in their portfolios.

Equity markets have been more negative in the Euro Zone, since the cuts were up to -3,36% in the Spanish selective IBEX35 (leading the index to 8.800), and -2,63% in the EUROSTOXX50 (closing below 3.000 levels).

In currency markets, new advances of EUR regarding its major pairs; the EUR/USD now around the 1,1365 (+2,26%) after ruling out an early rise in interest rates, and the EUR/GBP trading at 0 ,7825 levels (+2,99%).

Regarding commodity markets, the Brent made slight gains although no agreements were reached after OPEC Summit held on Tuesday. But it was the Ounce of gold the winner from the week, with rises of +2,63% acting as a refuge asset after the growing uncertainty in financial markets.