Weekly Market Recap - September 23, 2016

Summary

On Wednesday, the Federal Reserve announced its decision to hold interest rates unchanged at 0.5%. The announcement did not go unnoticed within the markets, having rippling effects in commodities and currency. As far as stocks, markets around the world exhibited strong performances.

In the US, the S&P 500 and Dow Jones Industrial Average (DJIA) both had a quiet start to the week, but then jumped up on Wednesday—the day of the Fed announcement. On this day, the S&P 500 gained 1.09% and the DJIA went up 164 points or 0.90%. The advances were not sustained through the end of the week, for on Friday the S&P 500 lost 0.57% and the DJIA dropped 0.71%. Over the five days, the S&P 500 rose a total of 1.19% to 2164.69 and the DJIA rose 0.76% to 18261.45. The Nasdaq Composite, however, did not follow these trends and had a relatively strong week. The index experienced a three-day consecutive gain, Tuesday to Thursday, going up 1.17% across the week to 5305.75.

This week, Twitter has proven itself to be a stock to watch. The social media network leapt over 20% on Friday after the second Thursday night football stream of the season, a new service that has gotten positive reviews. Furthermore, the company is creeping closer to a potential sale that has the ability to increase value.

Across the Atlantic, in European markets performed well this week. Losing 0.72% on Friday didn’t stop the Euro Stoxx 600 from making a huge week gain of 2.23%. In addition, the Euronext 100 Index had a strong week, going up a total of 3.38%. Focusing on the UK, the FTSE 100 rose Monday through Thursday and slipped less than a mere 0.1% on Friday. Overall, the FTSE 100 gained 2.97% to 6909.43.

Positive market performances continued in Asia. Although the Nikkei Index was only open three out of the five days this week—Tuesday, Wednesday and Friday—it managed to make headway. The Japanese index rose 1.42% to 16754.02, its best day being Wednesday with a gain of 315 points or 1.91%. The Hang Seng Index opened the week on Monday gaining 0.92% and closed on Friday losing 0.31%. Examining the week as a whole, the index ended in green going up an aggregate 1.50% to 23686.48. While the Shanghai Composite also lost on Friday by 0.28%, the overall week was positive with gains of 1.03% to 3033.90.

On the bond front, the US 10 Year Treasury yield declined after Wednesday, and fell 1.2 basis points on Friday to a current yield of 1.62%. The German 10 Year Bund has fallen back into negative territory after bobbing up and down around the 0% yield early this week; its current yield is -0.085%. The Japan 10 Year has been fairly steady in the -0.05 range, peaking at 0% during Wednesday’s trading day, but dropping back down into negatives by the end of the day. The Japan 10 Year closed Friday at -0.049%.

Oil prices have been wavering this week, and dropped significantly on Friday by 3.97% to $44.48 per barrel. The drastic change is likely due to the Saudi announcement, doubtful of an upcoming supply deal. More information about the deal is to come on Wednesday after the OPEC meeting. Gold climbed this week due to the lack of Fed action. While the metal dropped 0.22% on Friday, over the week it rose approximately 2% to $1341.70 an ounce. Silver followed similar trends as gold, rising this week to $19.81 an ounce.

The dollar decreased in value against many currencies including the euro, yuan, and yen. The US currency went down against the euro by 0.62%, yuan by 0.12%, and yen by 1.26%. The currencies are currently trading at 1 euro for $1.227, 1 yuan for $0.1500, and $1 for 101.0050 yen. One currency that the dollar did rise against was the pound by 0.28%, however, the pound universally devalued against many other currencies including the euro and yen. The exchange rate between the pound and dollar is 1 pound for $1.2965.

Week Ahead

Monday: Bank of Japan Governor Kuroda Speech, Denmark Ifo Business Climate, US New Home Sales

Tuesday: Bank of Korea MP Meeting Minutes

Wednesday: US Federal Reserve Governor Yellen Testimony

Thursday: Euro Area Consumer Confidence, US GDP Growth Rate, US Fed Governor Yellen Speech, Japan Unemployment and Inflation Rates

Friday: UK GDP Growth Rate, Euro Area Unemployment Rate