Weekly Market Review — November 23–27, 2015
Releases of GDP Reports in Germany, United Kingdom and the United States Will be in Focus This Week
Most of the major currencies showed a decline against the USD at the end of the week. The largest decline against the US dollar was experienced by the Swiss franc (–1.34%) and the euro (–1.06%). Some smaller declines were recorded by the Japanese yen (–0.25%), the British Pound (–0.22%) and the Canadian dollar (–0.14%). Growth was experienced only by the New Zealand dollar (0.53%) and the Australian dollar (1.60%). During the trading week, the US currency maintained a general rising trend against its major competitors. It was supported by expectations that the Fed may increase its rates at the next meeting, scheduled for December 16–17. This intention was confirmed by the FOMC meeting minutes, which were published on Wednesday. This week promises to be busy with the publication of important economic statistics. On Monday market participants’ attention will be focused on the Fed’s announcement, which will be published at 15: 00 (GMT). On Tuesday, Germany will release data on changes in its GDP at 09:00 (GMT). At the same time, the index of current conditions of the IFO will be published. At 13:30 (GMT) the second revised estimate of US GDP will be published. On Wednesday, US will publish its report on Personal Income and Spending at 13:30 (GMT), as well as the basic price index for personal consumption expenditures, which is a key inflationary indicator for the Fed. On Thursday, Japan will report on the Consumer Price Index, which will be published at 23:30 (GMT). And, finally, data on the UK GDP will be published on Friday at 09:30 (GMT).
Last week the major stock exchanges in the United States were in an uptrend, although the opening of the week was marked by a sharp fall in stock markets against the background of terrorist attacks in France. Investors feared that the incident might trigger some economic problems. However, the market reaction was short lived. American companies, which reported last week, showed impressive results that supported the US stock markets. Investors were cautious before the publication of FOMC meeting minutes. After they were published the markets became optimistic that the US economy is ready for the first increase rates. Further dynamics of the stock markets of the United States will depend on incoming economic data. US stock markets finished last week in green: Dow +3.32%, S&P +3.24%, NASDAQ +3.57%.
European stock markets were trading upwards last week. The dynamics of trading were influenced by economic data published during the week. European stock markets were greatly supported by expectations of an expanding stimulus by the ECB. This was confirmed by the bank’s head Mario Draghi in his speech on Friday, when he noted that the European regulator is ready to use all measures to achieve its inflation target. This week, stock markets will be affected mainly by economic statistics.
The precious metal started last week with a positive trend amid the risks caused by terrorist attacks in France. The market’s reaction was short lived however. During the week, gold fell somewhat in price on a background of general strengthening for the US dollar. Prospects for the precious metal remain negative, especially given the expectations of monetary tightening by the US Federal Reserve at its next meeting, scheduled for December 16–17. Even traditional holidays in India, where gold is in high demand, cannot support the precious metal. In the short term the price of gold can reach again its multi-year lows.