IFC Markets - Analytics

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    Stock markets struggling for growth

    US stocks rose on Friday while the US dollar strengthened on positive economic data. The retail sales for January edged up more than expected. On the contrary, the December factory orders contracted. Moreover, the European bank shares strong growth had a powerful positive impact on markets. Amid this, the US S&P financial index recorded the daily growth of 4% which was the highest since November 2011. JPMorgan stocks added 8.3% on the news the bank’s chair acquired them on $25mln. Despite this news, the major stock indices ended the week lower with Dow Jones down 1.4%, S&P 500 down -0.8% and Nasdaq down -0.6%. The trading volume on the US exchanges on Friday was 8.7bn stocks which is 10% below the average for the last 20 trading days. Today the US markets are closed due to the President’s Day holiday.

    European stocks edged up on Friday on corporate data. Deutsche Bank announced a $5.4bn buyback of its Eurobonds which pushed its prices 11.8% up. The stocks of the German Commerzbank surged 18% on its strong Q4 financial report. The pan-European FTSEurofirst 300 index closed the previous week 4% lower tracking 14% losses since the start of the year. Today the seasonally adjusted December trade balance came out worse than expected in Eurozone which weighed on euro. At 15:00 CET ECB President Mario Draghi speaks in the European Parliament.

    Yen is weakening today for the second straight day which is seen as USDJPY rate growth. Today early in the morning the Japan’s Q4 GDP was released. It contracted 1.4% year-on-year falling short of expectations. The personal spending and industrial production fell more than expected too. The Japan’s prime minister Shinzo Abe said in Parliament the excessive currency volatility is unwished and the parliament will take steps to limit it if needed. Today the Nikkei index is on the rise. The market participants expect the weak yen to support the Japanese exporters. The next significant economic data on factory orders will come out in Japan on Wednesday.

    The China’s trade balance for January was released today in the morning, the data being mixed. The trade balance surplus increased more than 3bn. amounting to $63.3bn. This happened due to the 18.8% lower imports while export fell 11.2%. Nevertheless, the increased surplus pushed the yuan to dollar rate to the highest since early January. On the chart it looks as the descending exchange rate. The commodity futures almost shrugged off the data from China.

    On Friday the global oil prices increased considerably due to the UAE Oil Minister announcement OPEC was ready to consider production cuts. The global oil glut will be of 1.5mln barrels a day in the first 6 months of 2016, according to the International Energy Agency. The import of oil from China fell 20% to 6.3mln barrels a day in January compared to December which is the lowest since last October and is 4.6% lower than in January 2015. The majority of Western analysts still await the oil prices around $25 a barrel but such fall in prices shall happen due to the developing countries which will be forced to increase production to compensate for the contracted revenues. In the US the active oil rigs count has fallen for the 8th week in a row to the 6-year low of 439 units. In the same period of last year their count was 1056. The gross count of US rigs is 541 now (439 oil rigs and 103 gas rigs) which is the lowest since 1999.

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