Major Events of Last Week



The global financial markets did not receive any last-minute Christmas cheer as they slipped lower at the end of the shortened festive week. A late surge in oil prices did help European equities stage a moderate recovery by enabling them to track the earlier bullish movements of Asian stocks. The USA completed the session by publishing a promising key labor statistic which surpassed analysts’ expectations. In essence, an escalating holiday spirit prompted the majority of investors to adopt a muted stance effectively stifling the creation of any new price-driving catalysts of significance. The topmost US indices produced a mixed reaction to these events last Thursday epitomized by the Dow Jones Industrial Average falling just over 50 points; the S&P500 inching downwards by almost 4 points while the NASDAQ rose by nearly 3 points.

Wall Street failed to extend its gains for the fourth consecutive day by nudging slightly lower at the end of last week. The primary culprit for this lackluster performance was a faltering US energy sector exemplified by both Chevron and Exxon falling 0.5% despite oil prices recording another day of gains.

However, the USA did succeed in temporarily boosting trader sentiment by publishing a key economic parameter disclosing that the number of Americans claiming first-time benefits receded during the prior week, ending 19th December. This encouraging result, unquestionably, provided additional evidence that the US labor market continues to strengthen. Specifically, the US Department of Labor advised that initial claims dropped to 267,000 recording its lowest value since 1973.

Prominent analysts summarized this development by stating that this key unemployment parameter has now resided below its pivotal 300,000 for 42 straight weeks in a row. They also stated that the improving US labor market was currently generating the necessary levels of consumer spending required to underpin the national economy by countering negative impacts, such as deteriorating global growth, a strong US Dollar and declining investment in the manufacturing sector.

Economists started to focus late last week on determining whether oil prices had finally recorded a bottom after they posted four sequential days of gains. This rally did provide some positive benefits as, for example, it definitely helped the European financial markets regain their composure just before Christmas. This bullish movement certainly reflected the earlier positive spirit of the Asian markets. The recovery in crude oil prices was basically driven by both the elimination of a 40 year-old ban on US exports and deteriorating supplies. The persistent spiral of cheaper oil during recent months has exerted substantial pressure on many global central banks forcing them to implement new monetary easing policies.

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What to Expect This Week



Next week will again be a shortened one as the global financial markets will, of course, by closed on Friday for New Year’s Day. In addition, you should be aware that reduced seasonal trading volumes could generate erratic price movements and spikes in volatility.

The Fed, Dallas section, will present its latest Manufacturing Survey on Monday. Investors will study this document carefully in order to determine whether the present worrisome slump in US factory output will persist. In fact, this parameter should confirm this trend as it is expected to slip lower from its prior reading of -4.9 to -6.0 this time around.

On Tuesday, the USA will disclose a key Consume Confidence Index which should extend its gains for the second consecutive month. Specifically, expert consensus predicts that this indicator will climb from 90.4 to 93.5.

The United Kingdom will launch Wednesday by revealing major data from its highly important housing sector. Sterling will receive a boost if the outcome is greater than the forecasted + 0.1. The Eurozone will then post its Money Supply Growth for the third quarter of 2015. This figure should provide valuable insights into whether the current stimulus measures of the European Central Bank (ECB) are starting to drive inflation towards its designated target.  Later, the USA will publish its Pending Home Sales for last month which should counter recent worse-than-expected housing statistics by rising to 0.5% from 0.2%.

On New Year’s Eve, the USA will release its Jobless Claims for the week, ending 26th December. Although this figure is expected to increase from 267k to 270k, analysts are still anticipating that it will verify that the US labor market continues to garner traction. The USA will then close the week and 2015 by delivering premier inflationary data. The Chicago PMI (Purchasing Managers Index) could provide a late uplift by surging from 48.7 to 50.0.

As advised, no events or data releases are scheduled for Friday, New Year’s Day.

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