Weekly Market Review — November 2–6, 2015
The NFP Report Will Define the Week
The US Federal Reserve played a key role in the evolution of the financial markets last week. The US currency dramatically strengthened against its major competitors after the announcement of the results of the two-day meeting and release of the Fed statement. The latter contained a hint on the possibility of a rate hike at the next meeting in December. However, the Fed will closely monitor upcoming statistics on the US economy, so no decision has been made yet. The string of important economic statistics in the coming week will be opened up by the Manufacturing PMI in China, which will be published on Monday at 01:45 (GMT). On Tuesday at 03:30 (GMT) Reserve Bank of Australia will announce its decision on interest rates. The ECB President Mario Draghi will have a press conference at 19:00 (GMT) on the same day. At 21:45 (GMT) New Zealand will publish its report on the labor market. Wednesday will be marked by the speeches of representatives of central banks: Fed chief Janet Yellen will have her speech at 15:00 (GMT), while Glenn Stevens from Australia will speak at 22:25 (GMT). On Thursday at 08:15 (GMT) Switzerland will report on the Consumer Price Index, and the Bank of England will announce its decisions on interest rates and the asset purchase program at 12:00 (GMT). Forty five minutes later the head of BoE Mark Carney will have his press conference. On Friday at 13:30 (GMT) Canada will report on the labor market. The most important event of the week, the NFP report will be released at the same time in US.
The major US stock indexes showed no clear trend last week: Dow increased by 0.10%, the S&P rose by 0.20% and the NASDAQ shot up 0.43%. The dynamics of the stock markets of the United States have been influenced by US economic data and corporate reports last week, including the quarterly report of Apple, which has outperformed even the most optimistic expectations. Meanwhile, stock markets have also been pressured by falling oil prices. The Fed statement, which opened up a possible tightening of monetary policy during their next meeting in December, has also put a huge pressure on the US stock markets.
After the huge increase seen 2 weeks ago, the major stock exchanges in Europe have seen little action. The economic data and quarterly reports, which typically influence the markets, haven’t revealed any spectacular development. Among the economic data it is worth noting the inflation report in the Eurozone and Germany, as well as Factory Orders and Business Sentiment Index, which haven’t brought any big surprises. The situation may change, as markets are expecting more important statistics this week that could have an impact on the stock exchanges in Europe. The statistics on the Chinese economy in particular could have a large knock-on effect.
Light Sweet Crude Oil Futures, Daily
During the first half of the week the price of Oil experienced a downwardly trend compatible with a situation of oversupply in the world market. The US Crude Oil Inventories report was released on Wednesday and it showed a decline in inventories, thus giving the price an upward momentum. This was compounded by the ongoing conflict in Syria and negotiations to resolve it, which are taking place in Vienna. Overall though, the medium term expectations for this commodity remain negative.