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US

S&P 500 was driven up by the start of the earnings season after that some major US banks announced quarterly results higher than the expectations. JP Morgan Chase, Bank of America and Citigroup reported respectively earnings per share of $1.35 on Wednesday, $0.21 on Thursday and $1.10 on Friday, while they were expected to be $1.26, $0.21 and $1.03. The index kept rallying until Thursday when it reached $2,083 and lost 10 basis points on the following day. However, it gained 1.62% over the week and closed on Friday at $2,081, its monthly high.

Dow Jones Industrial Average followed the same trend, closing at $17,897 (+1.82% for the week).

The VIX index finished at 13.62, decreasing by 11.3% during the week.

The 30-year Treasury bond auction on Thursday witnessed the lowest allotment, 24.1%, for primary dealers since 2006. Although bond yields increased by 5 basis points during the day (from 2.56% on Monday to 2.61%), at the end of the week it returned to Monday’s value. The increased demand was driven by poor economic data and by foreign investor looking for opportunities outside Europe and Japan (on Friday German and Japanese 30Y bond yields were 0.811% and 0.395% respectively).

The dollar index experienced a three-day rally appreciating by 1.03% between Tuesday and Thursday when it reached 94.91 but closed at 94.68 (-0.24%) on Friday.

 

Oil prices increased in the first two days of the week: Brent closed on Wednesday at $44.69, the maximum of the month. Even if it decreased in the following day, it closed the week at $43.09, gaining 2.74%. On Sunday, the global major producers will meet in Doha in order to come to a decision about a possible output freeze.

 

UK

On Wednesday, FTSE100 index joined the upward trend of the whole European stock market following positive Chinese data about trade balance and recovery in commodities. FTSE100 closed at 6,365.10 on Thursday (the highest close in 2016) and gained 2,66% from Monday. However, on Friday it lost 0.34% (closing at 6343.75) because of concerns of a negative impact on housebuilders from a possible Brexit.

On Tuesday the International Monetary Fund declared that the world economy would suffer if Britain would to leave the EU. Moreover, it reviewed the UK’s expected growth for this year from 2.2% to 1.9%.

On Thursday, Bank of England said that British exit from the European Union would probably hurt the economy and cause sterling to slide. GBP/USD reached the maximum of the week (1.437) on Tuesday and then started falling until 1.420 on Friday. On Friday the official 10-week campaign on whether the UK should leave the EU began.

Next week additional data on the status of labor market in February will be released as well as Retail Sales for the month o March.

 

Europe

During this week, many CPI data were released in the Eurozone. Starting from Germany, France, and Italy which were all in line with expectations at 0.8%, 0.7%, and 0.2% respectively. The overall YoY Eurozone’s CPI was, as expected, 0%. Although, as stated by a member of the ECB Governing Council Ewald Nowotny, the core CPI is more reliable, which was released at 1%, as expected.

The Stoxx Europe 600 followed a bullish path from the opening on Monday until Thursday, and closed at 342.79, gaining 3.5% over the week. Conversely, The EUR/USD fell 1.72% during the same period. The movements were a reaction to Nowotny’s speech on Wednesday 13, which implied a continuation of expansionary monetary policy of the ECB until inflation would reach a satisfying level of slightly lower than 2%. In fact, lower expected interest rates would depreciate the Eurozone currency and push the stock market higher.

 

At the same time, Germany’s DAX 30 surged 4.71%. Most of the gain was on Wednesday in the same way as the Stoxx Europe 600.

Next week on Thursday 21st, there will be the ECB’s meeting followed by the press conference in which the governor Mario Draghi will announce the measures against low inflation rate.

 

Rest of the World

China’s Shanghai and Shenzhen CSI 300 Index closed 2.71% higher at 3272.21. Most of the gain occurred on Wednesday when high trading volume brought the market to the high of the week at 3295.82. The reaction was following the release, by the Chinese National Bureau of Statistics, of the monthly trade balance: exports increased by 11.5% while imports decreased by 7.6% compared to the expectations of respectively 2.5% and -10.2%.

Also YoY industrial production, released on Friday, over scored expectations coming out at 6.8% against 5.9% expected, 1.4 percentage points more than in February.

Finally, Year on year GDP for the month of March was at 6.8%, in line with expectations. This week only data on CPI were disappointing showing a YoY inflation unchanged from February falling short of 0.2 percentage points with respect to expected 2.5%, and MoM CPI at -0.4%, more negative than expected -0.3%.

 

Brazil’s Bovespa index gained 5.81% this week. The driver was mainly Tuesday’s Retail Sales release that was by far better than expected at 1.2% instead of the forecasted -0.2%. In the following days, the market traded higher than in the past week and closed at 53,227.74.

During the week, BRL/USD, opening at 0.2829, registered some gains touching a weekly high of 0.2891 but ended the week closing almost unchanged at 0.2830.


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