Review of November 9-13, when macroeconomic reports raise doubts. Forecast for the week of 16 – 20 November

By | November 14, 2015

Equity markets finished the week “in the red“. Dow Jones fell 3.84%. NASDAQ lost 4.58%. On the one hand, the pressure on the benchmarks have expectations soon began to tighten monetary policy the US Federal Reserve. But on the other hand, the indices are not too optimistic and perceive negative statistics from the United States (as, in particular, happened on Friday after the release of weaker-than-expected retail sales data). The German DAX 30 (FDAX) also ended the week lower at 3.19%, including under the influence of a further signs of a slowdown in the German economy (GDP grew by 0.3% in the 3rd quarter against growth of 0.4% in the second) . Under the pressure and turned Hong Kong HIS, who lost for the week 2.65%. A number of negative data on the Chinese economy (fall in price pressures, slower than expected growth in industrial production, the decline in lending to 476.6 billion vs. 1.14 trillion) have had on the benchmark pressure.

In commodity markets the majority of assets remained largely under pressure amid fears of lower demand from China. Copper (HG) fell by 3.57%, Platinum (PL) lost 8.57%, reaching the lowest level in 7 years (859.9), Palladium (PA) has fallen by 12.82%. Gold (XAU / USD) updated the July low (1074.08), but could not continue to fall. Losses amounted to 0.56%. Silver (XAG / USD) and closed with a decline of 3.45%. Brent crude oil finished the week down 6.77%, noting at least at the level of 44.14. Pressure for oil also provide evidence of growing imbalance of supply and demand on the world market.

Chart of the week:

platinum price chart
Platinum price chart

The economic data of the last week:

  • Monday. Germany: September, the trade balance 19.4 billion euros against forecast 20.0 billion
  • Tuesday . China: October, CPI + 1,3% compared to 1.6% in September. PPI fell 5.9%
  • Wednesday. China in October, industrial production + 5.6% vs. 5.8%
  • Friday. US October retail sales 0.1% – below the forecast of 0.3%
Forecast for the week of 16 – 20 November
Stock market
This week attention should be paid to several events. First, is the data on the consumer price index in the United States. After last week’s report on the producer price index reflected the decline in price pressures, this release is of particular importance. Even slight signs of easing price pressures at the consumer level may be enough to convince the market that the Fed may again postpone the start of tightening, although at this point in time, the probability of a rate hike in December is estimated at 69.8% (according to the positions of futures bet).
From the point of view of the further actions the Fed may be of interest Minutes of the October meeting of the Federal Reserve, published Nov. 18. Most likely, nothing new, he will not bring, and will only further confirmation of the Fed’s aggressive attitude. However, even the slightest hint that a rate hike may be delayed, may be enough to start a fairly active buying of US indexes. Dow Jones (YM) can return to the level of 17516, Nasdaq (NQ) is able to rise to the level of 4600.00.
Commodity and raw market
Quotes of Brent crude oil escaped beyond the range of 47.00 – 54.00, breaking its lower bound. Technically, this opens the way for black gold in the area of the lows marked in August of this year (42.20). Of course, in many ways it contributes to this negative outlook IEA information that net supply of crude oil rose to 1.58 million barrels a matter of fact, as well as data on the growth of commercial stocks in the United States. However, the fall is unlikely to be sustained. In the United States may soon begin a significant reduction in production volumes.

Firstly, these conclusions are pushing data from Baker Hughes, which showed a significant reduction in the number of operating drilling rigs (drop compared to last year amounted to 63.6%). Second, the US Department of Energy fixes the decline in production in the major provinces of States. Also, the market will follow the EIA data on commercial stocks in the United States. If the index is still starts decline from historic highs, oil can get a positive boost.

Against this background, the black gold may start to return to the district level 47.00. In addition, the hope of all the commodity market can be associated with the actions of the People’s Bank of China. Recently there were rumors that the regulator may decide on further rate cuts. If the rumors become facts, could increase expectations of growth in energy demand, which will lead to an acceleration of inflation.

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

Share on FacebookShare on Google+Tweet about this on Twitter

Leave a Reply

Your email address will not be published. Required fields are marked *