Weekly Market Review – June 27 – July 1 2016
News from UK and China will heavily influence the markets this week.
At the end of last week most of the major currencies fell against the USD, with the largest being the GBP/USD (-4.92%). Smaller drops included the euro (-1.63%), Swiss franc (-1.44%) and Canadian dollar (-0.81%). On the other hand the Australian dollar (+ 1.01%), the New Zealand dollar (+ 1.06%) and Japanese yen (+ 1.76%) all rose against their US counterparts.
Over the last week the US dollar rose significantly across a broad market spectrum. Janet Yellen’s testimony got the proverbial ball rolling as it provided a significant boost. However, the Brexit ultimately stole the show. 51.9% supported a Brexit, while 48.1% were against such a move. The outcomes caused all European currencies to fall against the USD. The only currency that posted significant gains was the JPY, which is used a go-to safe asset in a time of market uncertainty.
This week’s trading dynamics will depend on more news from the UK. Additionally, market participants should pay attention to in German and Eurozone CPI data, scheduled for Wednesday 12:00 GMT and Thursday 9:00 GMT respectively. On Friday Chinese Manufacturing and Service PMI’s will undoubtedly influence the market.
During the first half of last week, most major US stock indices grew moderately. Additional support came via Janet Yellen’s testimony on the state of the US economy, which for the most part was positive. However, on Friday that all changed. The results of the Brexit put major pressure on all of the global stock markets. A number of US indexes recorded the largest one-day drop since “Black Monday” back in August, 2015. This week investors should pay close attention to additional news from the UK as it of course has the potential to impact the markets.
At the end of the trading week: Dow -1.17%, S & P -1.60%, NASDAQ -1.51%
Up until Friday major European stock indexes grew as the expectations were that the UK would remain in the EU. Additionally, ECB President Mario Draghi’s speech helped the market. However, on Friday that all changed for the worse as Britons voted “Yes” to the Brexit. This week all eyes will be on the UK. Additionally, Chinese economic data scheduled for Friday will further impact the markets.
Brent Oil, Daily
Oil spent last week trading in a broad range, with news from the UK impacting the market the most. On Friday, oil recorded the largest one-day drop so far this year as Britons voted “Yes” to the Brexit. Demand for oil now has the potential to fall further, with a potential economic slowdown looming. This week’s trading dynamics will mostly depend on market conditions as opposed to the risk appetite of investors.