By IFCMarkets
Dow advances 5th straight week
US stocks climbed on Friday while US dollar strengthened on positive economic data in US.
Consumer sentiment index by Michigan University for December advanced more than anticipated having reached 98 points. This is its high since January 2015. Additional positive was lower wholesale stockpiles in October. S&P consumer staples index gained 1.4%. US dollar strengthened in anticipation of US Fed interest rate hike on December 14, 2016. The trend was also supported by weaker euro after the ECB meeting. ECB extended its bond-buying program from March to December 2017. No significant economic data came out on Monday.
ECB decision pushed euro lower but supported stock markets
European indices edged up on Monday while euro continued sliding down. Pan-European STOXX 600 showed record weekly increase since January 2015. Stocks were rising in line with global stock market indices.
Weak economic data came out in Germany on Friday. Surplus of trade and current account balances for October was far below expectations. This triggered stock market correction and pushed European stocks lower on Monday. Meanwhile, Italian stocks showed the reverse trend. They dipped on Friday and rebounded on Monday. The leading Italian bank UniCredit is planning to sell its asset management company Pioneer Investments for $3.8bn euros. On this news the bank’s stocks soared 3.5%. No significant economic news came out in EU on Monday.
Nikkei continues advancing
Nikkei has been showing steady growth since Wednesday December 7, 2016. It hit a fresh year high on Monday on rising global stocks and weaker yen. Economic indicator BSI Large came out positive on Friday. Factory orders for November came out on Monday: they fell year over year although less than anticipated. Japanese yen hit a FRESH 10-month high against the US dollar and surpassed 116 yen a dollar. Next significant economic data will come out in Japan on Wednesday morning: Tankan indicators and manufacturing PMI. Tentative outlook is positive which may hinder yen weakening.
Independent oil producers supported OPEC decision on oil production cuts
Oil opened with gas up on Monday as non-OPEC countries decided to follow the steps of OPEC members and cut oil production by around 600 thousand barrels per day (bpd). As a result, the price is to fall 1.8mln bpd or around 2% from the current production levels. Brent price reached the high since July 2015. Oil producers agreed on joint production cuts for the first time in recent 15 years. Meanwhile, higher global oil prices triggered activity in US shale oil production. Active oil rig count rose by 21 to 498 rigs in a week in US, according to Baker Hughes. This is the record weekly increase since last July but the rig count was higher at that time (524 rigs). Market participants expect US oil rig count to reach around 700 next year.
Silver advanced on higher demand from “green energy”. GFMS agency expects the silver demand for production of sun batteries and in PV to reach 83.3mln ounces in 2016 compared to 1mln ounces in 2002. At the same time, demand is expected to rise further. Production of solar and wind energy is to rise twofold till 2020, according to US International Energy Agency. In contrast to silver, gold prices hit a fresh 10-month low on Monday. They are falling on expected Fed rate hike on December 14, 2016.
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