With the arrival of the New Year, the stock markets around the world have started immediately to act frantically to defend from the high volatility and Chinese macroeconomic data. Also, the price of oil continues to fall as in 2015; this time due to concerns on the conflict between Iran and Saudi Arabia.
Surely someone was waiting for it already, but the first ’cause of crisis’ of 2016 in the markets was caused by China. China has grown so much faster and its positive expansion has affected all Western countries, especially those who had/have an economic crisis (China bought a part or their entire debt) and the countries of South America from which China buy raw materials.
The main problem is that the Chinese market is evolving just as quickly and the demand for raw materials is falling. In fact, as it has been evidenced by the data on Monday, the manufacturing sector has suffered a new contraction in December after two months of stability.
In response to this, the two Chinese stock markets (Shanghai and Shenzhen) closed with a loss of 7%, triggering for the first time of the year the ‘circuit bakers’ (the mechanism for the suspension of shares trading). Subsequently, during Tuesday’s session, the Popular Bank of China announced an injection of liquidity into the money markets in the amount of $ 20 billion.
The collapse of the Chinese stock exchanges has also plagued the international ones: the Japanese stock market closed losing 3%; the Dow Jones fell below the 17,000 level for the first time since October 2015 and the NASDAQ has lost more than 3%; among all the European market stocks, Frankfurt Dax at -0.52%.
It also continues the devaluation of the Chinese Yuan leaking in more than 5% in two months against the dollar.
The prices of the black gold were significantly affected by the conflicts in the Middle East and by the strong concerns about the worldwide excess of supply.
Usually, when concerns over production in the Persian Gulf are strong, the price of oil tends to rise, but at the beginning of 2016, oil prices continue to fluctuate wildly.
Actually, oil prices rose at first, and then decreased both in the European and in the American sessions. Brent reached $ 36.85 per barrel, while in London, it fluctuated around 37 $ this morning.
January, the 5th were also published data on Europe inflation: consumer prices posted from Eurostat showed that inflation grew less than expected, still far from ECB target.
The 2016 did not start certainly on the sly, so let’s see what awaits us in the first month of the year. The more important will be on January, the 8th when USA will show the data about Non-Farm Payrolls. This is a very important indicator about the health of the US economy.
About US we will have also: US inflation (the 20th); Federal Reserve meeting (the 27th); GDP (the 29th).
We will look carefully also to the macroeconomic data in China: inflation and producer prices (January, the 10th) and GDP fourth quarter of 2015 (the 19th).
About Eurozone, we will wait for: Bank of England meeting (the 14th); EBC meeting and press conference (the 21st); UK GDP and German inflation (both on the 28th); January Eurozone inflation (the 29th).
New Year has started off with a bang, don’t you think?