Julex Market Weekly 01-12-2014 | Equity Markets Rose in the Week

Top Stories Last Week

• Equity Markets Rose in the Week

Global stocks rose slightly in the second week 0f 2014. S&P index rose 0.7%, and MSCI EAFE index rallied 1.3%. The MSCI Emerging Market Index was up 0.6%. On other hand, gold climbed 0.8%, while the SPGC commodity index dropped by 0.6%. The bond markets rose as well. Barclays US Treasury index was up by 1.1%, while US high yield bonds rose by 0.7%.

• US Employers Added Only 74K Jobs in December

The US added only 74K jobs in December, the weakest showing since the start of 2011, and far below the 205K monthly average of the three preceding months. The unemployment rate fell to 6.7%, which is the lowest since October 2008. However, 347K people dropped out of the labor force. A broader measure of unemployment that also captures people who have given up looking for a job out of frustration remained at 13.1%.

• European Central Bank Kept Monetary Policy on Hold

As expected, the European Central Bank elected to leave the euro area benchmark refinancing rate unchanged at 0.25%, the rate on the marginal lending facility unchanged at 0.75%, and the overnight deposit rate unchanged at 0%. There was very little emphasis on recent positive macro data and instead the ECB president, Draghi highlighted ECBs readiness to take decisive action. In his press conference, two dovish comments were included. First the forward guidance was strengthened: “the Governing Council strongly emphasized that it will maintain an accommodative stance of monetary policy for as long as necessary”. Secondly, Draghi said the ECB remain determined “to take further decisive action if required”.

• Chinese Export Growth Slowed

China’s export growth slowed more than expected in December due to a higher comparison base a year earlier and a clamp-down on speculative activities disguised as export deals, missing the official target on foreign trade. But the outlook for 2014 is expected to be brighter as global demand picks up, giving more wiggle room for Chinese leaders to push through reforms to balance the world’s second-largest economy. Exports rose 4.3% in December from a year earlier, slowing from 12.7% in November and compared to market expectations of 4.9%. Imports rose 8.3%, quickening from 5.3% in November and overshooting the same rate expected by the market, raising optimism that domestic demand may remain firm despite signs that the world’s second-largest economy is losing steam.

• German Unemployment Fell by 15K

German unemployment fell for the first time in five months in December, signaling increased confidence by the nation’s companies even as pricing power in the euro area remained subdued. The number of people without a job in Europe’s largest economy decreased by a seasonally adjusted 15K. Germany is relying on its home market for growth as the Euro zone struggles to sustain a recovery. A robust jobs report for the end of the year provides further support for a strong finish to 2013 from consumer spending.

Top Stories to Watch This Week

• US Retail Sales

US retail sales are likely to rise by 0.4% in December.

• US Inflation Rate

US CPI index is expected to rise by 1.7% in December on YOY basis.

• Euro Zone Inflation Rate

The CPI in Euro zone is likely to rise by 0.8% in December on YOY basis.