Q1 2016 results – markets looking down.

US stocks closed lower on the last trading day of Q1 2016 after a 7-week rally that salvaged US indices from their worst start of the year since 2009. This year started with all major world indices slumping deeply in the red amid global economic growth concerns and oil prices below $30 a barrel. Later, in February, the oil prices started rebounding having found the bottom and on plans of world major oil producers to freeze the oil production at January levels in order to fight its supply glut. The Brent crude exceeded $40 a barrel in March and continue hovering over that level as some loopholes in the oil production cuts agreement were found (such as no limiting export volumes which Russia is planning to make use of) and as Iran agreed to sign a deal only after ramping up production to the pre-sanctions levels while Qatar said the state is to sign an agreement only after Iran does it.
US dollar index, a measure of a greenback’s value against a basket of six major currencies, dipped on Friday ahead of the US payrolls having closed the Q1 2016 4% lower – its worst performance in 6-1/2 years – because of the global economic uncertainly and Fed’s reluctance to raise interest rates. The index fell 0.1% on Friday to 94.60 having hit a fresh 5-month low a day before. The US dollar edged lower after the US Fed Chair Janet Yellen noted on Wednesday the Fed shall be cautious in hiking the rates which made investors move the funds out of Dollar.
S&P 500 index recovered 13% since mid-February and ended the Q1 2016 0.8% higher, Dow Jones added 1.5% while Nasdaq closed the quarter 2.7% lower. Nevertheless, the US indices edged lower on Thursday. S&P 500 index fell 0.2% to 2,059.74 with 9 out of 10 its major sectors closing in the red and materials sectors leading the decliners (-0.88%). Dow Jones industrial average lost 0.18% to 17,685.09, Nasdaq closed with modest surplus of 0.01%. The trading volume on the US exchanges was 6.8bn shares yesterday below the 7.7bn shares average for the last 20 trading days. The US jobless claims came out yesterday higher than expected but still below the critical level of 300 thousand which point on US labour market strength. Today at 14:30 CET the US non-farm payrolls for March came out better than expected (215k). At the same time the March unemployment rate came out having risen in March to 5.0% from 4.9% in February. At 16:00 CET the ISM manufacturing PMI and ISM priced paid for March will come out, the tentative outlook is positive. At 19:00 CET the Baker Hughes US oil rig count is anticipated.
European stocks edged lower today in early trading following the negative trend in the Asian markets. The FTSEurofirst 300 index dipped to a one-month low of 1,303 points today with financial and insurance sectors leading the decline. Germany’s Dax 30 index and France’s CAC 40 lost around 1.7% each while UK’s FTSE fell 1.2%. Today in the morning the Markit manufacturing PMI came out in Eurozone, Italy, France and Germany better than expected. The only European country where the index fell short of expectations was Great Britain. The British pound sterling weakened to a 16-month low against the euro on Friday on the weak manufacturing sector survey. The pound vs. euro fell 0.5% to 79.65 pence.
Asian stocks slumped on Friday after the Bank of Japan released a survey of major manufacturers highlighting their sentiment was at 3-year low. As a result, Nikkei posted 3.5% losses on Friday. USDJPY fell 0.4% to 112.17 per dollar on Friday having lost already 6% since the start of the year as turbulence in the global markets pushed investors into the safe-haven yen.
Gold rose on Friday as Asian stocks edged lower with gold closing the Q1 2016 with the record quarterly gain in several decades. Spot gold advanced 0.1% to $1,233.30 an ounce ending the week 1.4% higher. The positive trend in gold was supported by the Fed reluctance to hike the rates but the today’s payrolls data may influence gold prices significantly.