Weekly Market Review — August 10-14
The Highlights of the Week Are GDP Reports in Japan, Germany and the Eurozone
Last week the major currencies showed a negative trend against the US dollar, except for the Australian and New Zealand dollars. The Australian and New Zealand dollars grew by 1.67% and 0.48% respectively. The euro fell 0.17%, the Japanese yen by 0.29%, the Canadian dollar by 0.37%, the British pound by 0.80% and the Swiss franc, which lost the most against the US currency, by 1.85%. Last week, the most important news was, of course, report on US employment. According to published data, the growth of new jobs in the US economy was slightly lower than forecast. The NFP came in at 215,000 versus an average forecast of 223,000. It is worth noting that the figures for previous periods have been revised upwards by 14K. The unemployment rate remained unchanged, while average hourly earnings rose in line with expectations by 0.2%. Also, similar reports were published by Australia and New Zealand. In Australia, unemployment rose unexpectedly to a level of 6.3% against an average forecast of 6.0%. But the indicator showed growth in the number of employees to the level of 38.5 against the forecast at the level of 10. As to New Zealand, the unemployment rate remained unchanged in the last quarter at around 5.9% and the number of employees dropped to the level of 0.3% against an average forecast of 0.5%. It should be added that last week was also published a decision on the basic interest rate in the UK and Japan. As predicted by most analysts, none of these banks change the settings of its monetary policy, leaving the rate unchanged at 0.5% and 0.1%, respectively. Among the most important reports scheduled this week are the data on unemployment by ILO, and the number of applications for unemployment benefits in the UK, which are scheduled for 08:30 (GMT) on Wednesday. Also, on Friday will be published data the preliminary GDP reports for the 2nd quarter of the year in Germany and the Eurozone at 06:00 (GMT) and 09:00 (GMT), respectively.
Last week, major US stock indices traded in a downward trend and showed a moderate decline. The DOW lost 1.79%, S&P fell by 1.25% and the high-tech NASDAQ fell by 1.65%. Last week the stock markets opened falling amid a backdrop of oil prices to the six-month lows, as well as moderately negative statistics of the US personal income and spending data. It should be noted that the dynamics of the major stock markets of the United States was influenced by concerns over a slowdown in Chinese economy, as well as the drop in shares of Apple. Moreover, labor market report from ADP showed that employment grew in a slower pace than analysts forecast. In addition, the dynamics of indices were pressured by negative quarterly corporate reports. And after the NFP and other data on labor market release on Friday, the index gained a new impetus to decline. Strong growth in new jobs opens the way for the Fed to the first rate hike in its September meeting.
Throughout the week European stock markets showed a positive trend, which is associated with the recovery of Chinese stock market. Also, the dynamics of trading was influenced by corporate reports and M&A activity in the region. In addition, the market was also influenced by the Bank of England decision to leave the UK base interest rate unchanged. The English central bank made it clear that the first increase should be expected no earlier than the first half of 2016. On Friday, the negative dynamics of stock markets was boosted by employment report in the US, which showed that the US Federal Reserve is on the way of normalization of monetary policy.
Light Sweet Crude Oil, Daily
Oil prices have spent the last week in a downtrend. Moreover, oil had updated its long-term lows almost every day. This was caused by concerns about the imbalance of supply and demand in the world market. The US Department of Energy reported last week that crude oil production in the country is at record levels in the past five years. In addition, OPEC is going to keep its market share by increasing production volumes. This situation is, of course, puts downward pressure on the price of oil.