December Week 1

   The S&P 500 rose 2.56% this week as several economic indicators brightened economic forecast. ISM Manufacturing PMI decreased from 59.0 to 58.7, above expectation of 57.9 while ISM New Order slightly increased from 65.8 to 66.0. With low oil price, manufacturing managers are more confidence with economic forecast that is likely to boost U.S. economy along with strength labor market.

   Federal Reserve Vice Chairman Stanley Fisher signaled to increase interest rate in a mean time as labor market improves more than expected. Unlike past couple of months, this news had a positive view on the market. Vice Chairman Fisher said that the Fed. will not surprise the market when it increases the interest rate, which means that there will be a plenty of signal when it does.

   Unemployment rate stays the same from last month at 5.8%. What surprised the market were nonfarm payroll and average hourly earnings. The nonfarm payroll increased from 243k to 321k, and average hourly earning also rose from 0.2% to 0.4%. It seems like Black Friday helped manufacturing industry that increased payroll. This level is expected to stay until next month as another holiday season is coming, Christmas.

Europe generally had a good week as crude oil price increased. Manufacturing and service PMIs declined but it didn't largely effect on the market. Low oil price already dragging European economy down that low PMIs were expected.

   All major European markets increased; DAX for 1.57%, CAC 40 for 1.37%, and FTSE 100 for 1.10%. As oil price increased, market participants expect to stabilize inflation rate; fading deflation fear away. The ECB president Mario Draghi still is indeterminate whether the ECB will implement the quantitative easing. It decreased market to -1.0% on Thursday. But on Friday, EU GDP was announced to 0.8% YoY; stagnated for three consecutive months. Improved U.S. labor market also signaled positive view on European.

   As a result, the DAX rose by 2.39%; cover -1.0% loss on Thursday. Unlike other European markets, FTSE 100 wasn't largely effected by the president Draghi's speech. Of course, not only it is not part of EU, the BOE's monetary policy is working fine. U.K. Service PMI surged to 58.6 from 56.2, and housing price is also stabilizing. The BOE is unlikely to rise interst rate soon; the FTSE is likely to continuously improve.

 


 


USD continuously strengthens this week. While crude oil increased by 1.45%, JPY and EUR depreciated 2.24% and 1.38% against USD respectively. JPY increased up to 120 yen/dollar this week. This strong dollar is expected to continue as oil price keeps low level, and quantitative easing still implemented, or expected to implement in those markets.