Last week, the market has found a lot of reasons to worry. The main conclusion that can be drawn from the last five days – the Fed rate increase to be, and perhaps as early as December. Aggressive comments Janet Yellen and strong data on non-farm payrolls only increased these expectations. But US benchmarks all this was seen as evidence of sufficient strength of the economy and only slowed growth at the end of the week. Dow Jones rose by 1.38%. NASDAQ rose by 1.23%. The German DAX 30 (FDAX) finished the week higher by 1.75%, driven in part by the weakness of the euro. Japanese Nikkei (NKD) added 3.12% against the statement of the head of the national regulator that the Central Bank is doing everything necessary to fight deflation and will continue to play a part in encouraging Japanese firms to increased investment.
Precious metals finished the week with losses. Gold reached a three-month low (1085.44), losing 4.71%. Silver is also closed with a decline of 5.17%. A strong report on the US labor market boosted expectations of an early Fed rate hike. Brent crude oil finished the week down by 3.58%. Including this has happened against the background of strengthening the dollar, which makes assets denominated in it less.
Chart of the week:
The economic data of the last week:
- Wednesday. US: October, the index of business activity in the services sector (ISM) 59,1 against the forecast of 56.5
- Thursday. The Bank of England did not make any changes in monetary policy. The forecast for inflation: below 1% in the second half of 2016
- Friday. US: October, the number of new jobs created is with agricultural sector 271,000 – higher than the forecast 180,000
Forecast for the week on November 9 – November 13
This week the US calendar does not indulge markets a large number of relevant reports. Only on Friday will be published data on retail sales. Statistics on the labor market (NFP) published encouraging. The number of new jobs exceeded forecasts (271,000 against expectations of 180,000). Moreover, the notes and the growth of hourly wages (0.4% vs. + 0.2%), which allows you to wait for inflation at this level. Published data can be called another confirmation in favor of a rate hike in the US Fed is already December meeting. Such expectations can be a deterrent to US stock indices. Against the backdrop of a lack of catalysts benchmarks may develop a downward correction. Dow Jones (YM) can return to the level of 17516, Nasdaq (NQ) is able to be reduced to the level of 4600.00. And just not strong enough retail sales may briefly return to buying interest in the area of these levels.
The German DAX 30 (DAX) has a chance to continue to grow. A key factor in support for the benchmark may remain idle imminent change of quantitative easing European Central Bank. Recall that at the end of October meeting, the head of the regulator noted that the economy needs additional stimulus. Also, Mario Draghi has hinted at the possibility of transforming the European QE program in December. Next week will be published the final data on the rate of economic growth in Germany in the 3rd quarter 2015. Also, come reports on consumer price index and trade balance. The weak figures will provoke strengthening expectations of further stimulus from the European regulator. The first reaction may be a short-term decline in the area FDAX 10600.0 level where it can be interesting for shopping.
Commodity and raw market
Quotes of Brent crude oil continued to hold within the range of 47.00 – 54.00. And while the movement in the area of the upper border of its tightly constrained by the mark of 50 dollars per barrel. Black Gold is still at the crossroads of conflicting factors. On the one hand, it concerns reducing energy demand from China and the euro zone. However, signs of decline in drilling in the US in the near future could lead to lower output. So next week the market will monitor the statistics of China (the consumer price index, data on industrial production and retail sales), as well as the traditional report on the number of operating rigs from Baker Hughes.
Signs of stabilization of the economy of China and the reduction in drilling in the United States can provide support for Brent crude oil. In addition, November 10 released an updated short-term forecast of the energy market. It is expected that the surplus supply on the world market in October can be reduced to 1.25 million barrels per day to 0.89 million. This clear signs reduce the imbalance. And this release may be one of the main catalysts for the black gold. If expectations are met, Brent crude may try to overcome resistance at 50.00 with the immediate goal at the level of 50.80 dollars per barrel.
Warning: Profitability in the past does not mean profitability in the future. Any projections are for information only and does not guarantee a result.