Weekly Market Review — December 28–31, 2015
Markets Experience Holiday Mood
Last week, the US dollar continued to lose positions against the background of a holiday correction in global markets. However, the US dollar will end year in the status of favorite. Since the beginning of the year, the US currency showed steady growth upon expectations of monetary tightening by the US Federal Reserve. This step was taken only at the December meeting, which led to the partial closure of long positions on the US dollar. At the end of the week all the major currencies closed above zero.
The highest growth against the US dollar was shown by commodity currencies: The New Zealand dollar (+ 1.72%), the Australian dollar (+ 1.44%) and Canadian dollar (+ 0.81%). Moderate gains were shown by the Euro (+ 0.79%), Japanese yen (+ 0.69%), the Swiss franc (+ 0.39%) and the British pound (0.25%).
The coming week will be the last of this year and accordingly will be characterized by low trading volumes. In addition, the news background will be limited. Priority should be allocated to the US consumer confidence indicator, which will be published at 15:00 (GMT) on Tuesday. At the same time, the indicator of pending home sales in the United States on the environment will be presented. Finally, on Thursday the United States traditionally publishes data on the labor market at 13:30 (GMT).
The main event in the US Stock Markets continues to be the Fed’s decision, made at the meeting on 15-16 December, according to which, main interest rates were raised by 25 basis points. Also, last week the major stock exchanges held with positive dynamics, aided by the recovery in commodity markets, as well as the publication of positive statistics on the US Economy. The last American economic statistics indicated that the decision taken by the Fed was right, and the US Economy will be able to cope with the next increase rates. At the end of the trading week: The Dow rose 0.23%, the S & P index grew by 0.94%, and the high-tech NASDAQ rose by 0.92%.
The main event for investors last week was the data on the GDP of Great Britain and France in their final estimate for the third quarter. French GDP showed some growth, while the corresponding figures for the British economy, though increased, fell short of the average forecast. The news on the Chinese government’s readiness to expand the range of stimulus measures if necessary also supported market. This week, trading will be held with reduced volumes, as markets are preparing to celebrate the New Year.
Light Sweet Crude Oil Futures, Daily
Last week oil quotations showed increasing dynamics, helped by the closing of speculative short positions on the asset. This, in turn, resulted in the publication of statistics on stocks of the Institute of Oil and US Department of Energy, which pointed to a significant increase. In addition, the OPEC’s optimistic forecasts about the recovery of oil prices have added some optimism for market participants. However, after the correction caused by the publication of statistics on inventories in the US, quotes on “black gold”, will go back to a downward trend, since the oversaturation of the oil market will be observed for at least the first half of 2016.