Weekly Market Review Jan. 27, 2017
US stocks closed lower again, compared to last week. Donald Trump is also formally inaugurated as the new President. The global market seems to wait for the effect of the policies that Trump would enact during his administration. The focus during the trading week is all on the new president where investors and other related parties are closely monitoring any uncertainty and possible market volatility during Trump’s term.
Global Market Recap
The Brexit issue still looms over the UK area as Prime Minister Theresa May made clear of the vote being put on the coming week. The vote would block the parliament deal whose aim is to maintain control of the UK’s labor movement and migration, together with the ability to trade in the European Union as a single market. Analysts note that the full effectivity of the exit would take at least two more years, and the move’s impact would certainly fall upon public consumers and business establishments.
Interest rates are still kept low by the European Central Bank, together with its implemented stimulus program as per the meeting last week. Mario Draghi, ECB President, made the unchanged announcement. Despite this, the European market could weaken after a weak retail report from the UK, which is attributed to rising commodity prices. If the trend continues like those for gas and oil, consumer spending would be affected and would lead to a wider scope, affected by a weakening economy.
Japan has a losing and winning streak over their currency’s disposition to the US dollar. The Japanese market is strengthening over its weakening currency. Japanese exporters are gaining, as businesses that get paid in US dollars are taking advantage of the high exchange rate. Analysts stated that 2017 would provide an unmoving trend both for the weakening currency and the stock prices, which are about to soar up.
China has good news to look up to as the gross domestic product target for 2016 was hit with 6.7%, despite the slowest rate way back in 1990. The said slow-down for the target was due to a lot of monetary policies that have been implemented, only to benefit in the short-term period. This includes increased spending for the consumers and lax credit policies. Be it noted also that the main factors for their economic slowdown are from high debts and full capacity on the industrial sector. The International Monetary Fund has provided an advice and warning that China’s continued policies may either push faster economic slowdown or unfavorable adjustment for the economy itself.
Despite a lot of measures being implemented by China, the title for fastest-growing economy went to the country, dethroning India. The reason for India’s title strip was demonetization. The said move removed the circulation of almost 90% of their currency. That is why, IMF cut their growth forecast to 6.6%, coming from 7.6%.