2015 Ends With a Whimper

Weekly Report - 03/01/2016

Limited Data and Weak Momentum Marked the Final Trading Week of 2015

With seasonal transactional volumes below normal levels and few economic indicators unveiled, financial markets were either mired in a sideways trend or extremely volatile depending on the asset class.  The dollar began its rebound last in the week as commodities, especially oil and gas remained volatile while the S&P 500 futures were unable to climb into positive territory for 1-year returns. 

Weekly Review

Data was particularly limited in the prior week as market participants pared positions and took to profit-taking ahead of the new fiscal year.  Data was predominantly US centric in nature with housing data including home prices and pending home sales among the key data points released.  According to the S&P Case-Shiller home price index composite of 20 major US cities, prices grew at a blistering 5.50% pace over the prior year on a non-seasonally adjusted basis.  This coincided with a -0.90% contraction in pending US home sales as seasonal factors combined with more regulatory proceedings have been blamed for the weaker home transaction results.  The S&P 500 futures did not managed to climb out of negative territory, with a 2015 return of -0.50%.  Commodities remained volatile with crude oil prices falling nearly 3.00% for the week.  As both API and EIA data confirmed, US crude oil inventories rose, gaining 2.629 million barrels in the latest reporting period.  Onshore global inventories are reaching record levels and could potentially exceed capacity in the coming months as production levels remain heightened.


The Week Ahead

The first week of 2016 will see many important data economic data points released from across the globe, with the main focus being manufacturing and services PMI figures from Asia, Europe, and North America.  The main event for markets is monitoring US employment figures with ADP nonfarm employment forecasting 190,000 private sector jobs added during December with the consensus estimating 200,000 jobs added to the BLS nonfarm payrolls due Friday.  The unemployment rate is expected to stay on hold at 5.00%.  Canada is also due to report on unemployment with the figure forecast to stay unchanged at 7.10% despite concerns about mounting job losses in the oil patch.  China will start out the week by releasing a manufacturing PMI from Caixin which is again forecast to remain in contractionary territory below the 50 threshold at 49.0.  By comparison, Euro Area manufacturing and figures from constituent nations including Spain, Italy, France, and Germany are expected to all print in positive, expansionary territory.  The United Kingdom is forecast to follow a similar trend in manufacturing while regional services PMI figures also set to keep expanding.


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