Review of September 21-25, when stocks in a minor key. Forecast for the week September 28 – October 2

By | September 26, 2015

Despite the rather meager macroeconomic calendar, last week, the markets found some reasons for movements. Negative news from the corporate sector, as well as weak data on the index of business activity in the industrial sector in China (PMI Caixin came out at 47 vs. 47.3 in August) put pressure on stock indices. Released on Friday revised upwards (3.9% vs. 3.7%) data on US GDP for Q2 could provoke a short-term pullback. As a result, Dow Jones lost 2.29%. NASDAQ closed with a decline of 2.67%. Hong Kong HSI ended the week with a total of -2.66%. The German DAX 30 (FDAX) fell by 3.09%.

GBP / USD pair dropped to 2.25%, by updating at least 4.5 months at the level of 1.5151. From their own catalysts may be called a data record deficit of public debt since 2012. In the future, the decline was due to the changing expectations of monetary policy. After a rather soft Fed statement, to increase by the Bank of England is now expected no earlier than 2016.

Gold, after a downward correction in the beginning of the week, could develop a growth on the flight from risky assets. Quotes pointed high at 1156.69, but to close the week slightly rolled under the influence of the US GDP data. As a result, the asset has appreciated by 0.6%. Brent crude oil has not gone beyond the previously established range of 47.00 – 50.80. “Black gold” finished the week higher by 1.28%.

Chart of the week:

gold trading
Gold chart

Economic data of the last week:

  • Monday. US: August, sales of second homes -4.8% vs. -1.3%
  • Tuesday . Volkswagen is involved in the scandal. US regulators have found software that deceive consumers and supervisors
  • Wednesday. China: September, industrial PMI 47,0 against the forecast of 47.5
  • Thursday. Norway’s central bank lowered the rate to 0.75% from 1.0%. Taiwan’s central bank lowered the rate for the first time since 2009 to 1.75%
  • Friday. US: Q2. GDP revised to increase to 3.9% from 3.7%, according to preliminary estimates
Forecast for the week September 28 – October 2
Stock market
US stocks is clearly not in the best shape. The situation on the market develops quite uncertain and the fact that the Fed does not give any clear signal regarding the timing of the rate hike, it only exacerbates. Plus additional shocks in the form of news from Caterpillar (CAT) and the scandalous stories with Volkswagen. Last, it must be said, it jeopardizes all automakers and paper supply companies, now infamous group. Against this background, you should not completely exclude the possibility of further decline benchmarok as the market is unlikely to be at this stage interested in risky assets.
Dow Jones (YM) can return to the area 15900 level with a further target at 15535 in the event of a breakthrough. Nasdaq (NQ) is able to be reduced to the level of 4165.00. Although towards the end of the week the market will begin to prepare for the publication of a key report on the US labor market. If the number of newly created jobs will exceed 200 thousand, and the unemployment rate keeps at least since 2008, the market may perceive this as a signal that the Fed has no reason to endlessly delay the rate hike. The first reaction can be drop in the indices, but showed some background, to the end of the week, they can recover quite quickly.
Commodity and raw market
Quotes of oil Brent (BRN) continue to be held within the previously established range bound 47.00 – 50.80. Recently, there was not any new catalysts that can snatch the black gold from the “outset“. Rusty quotes explicitly prevent concerns about the global economic outlook. If you pay attention to the weekly data from the EIA, they were mixed.
On the one hand, there was a decrease of commercial stocks. But this momentum indicator is unlikely to continue to show, because the holiday season is behind us, and refineries close for prevention. However, the decline in production halted. At the end of the week rate rose to 9.136 million barrels per day. But it does not cause particular concern, as is the number of working rigs in North America continues to decline. And it allows you to wait for the resumption of the fall in production. Once the number of operating drilling falls below the June lows, oil prices in the short term may resume growth and will probably try to pass the upper limit of the range, aiming at further growth in the area of ​​the level 52.10.
At a time when stock markets are “storm” and intensified concerns about the global economic outlook, demand will be particularly safe assets. In particular, the positive dynamics can demonstrate Gold (XAU / USD), provided that the drop in the stock markets will continue. In support of the precious metal can also act and the next stage of “currency wars“. Soft monetary policy pursued by a large number of central banks can contribute to acceleration of global inflation, and gold, as it is known, it is a good hedge such risks. Against this backdrop, gold could resume growth with the immediate goal at the level of 1164.00 dollars per troy ounce.

Warning: Profitability in the past does not mean profitability in the future. Any projections are for information only and does not guarantee a result.

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