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02/04/2016
Market Update

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Oil prices rallied to a three-week high on hopes of decreased output from Saudi Arabia and Russia. China’s mainland stock market plunged to a 13-month low on continued capital outflows despite a capital injection from its central bank, and the Bank of Japan introduced its first negative interest-rate policy.
This Week
  • Oil prices rallied to a three-week high on hopes of decreased output from Saudi Arabia and Russia. China’s mainland stock market plunged to a 13-month low on continued capital outflows despite a capital injection from its central bank, and the Bank of Japan introduced its first negative interest-rate policy.
  • U.S. economic growth slowed to a 0.7% seasonally adjusted annualized rate in the fourth quarter from 2% in the previous quarter. Net exports and inventory investment detracted, while spending on services, goods, government purchases and residential investment contributed.
  • Durable goods orders unexpectedly plummeted in December and in the year over year, largely due to declines in civilian aircraft and communications equipment. Decelerating shipments and unfilled orders widened the inventory-to-shipments ratio.
  • U.S. jobless claims unexpectedly fell by 16,000 to 278,000 for the week ended January 23. While the four-week moving average eased, continuing claims swelled by 49,000 to 2.26 million — a five-month peak — for the week ending January 16.
  • New-home sales surpassed estimates in December, partially attributable to a 4.3% year-over-year drop in median prices, with all U.S. regions seeing growth. Sales also gained for the year.
  • The S&P Case Shiller 20-City Index and Federal Housing Finance Authority both reported home-price appreciation (owing to a tight market) in November and in the year over year. CaseShiller presented especially strong price data, with the third straight month of appreciation in all 20 cities.
  • Preliminary data for January indicated that services-sector growth remains buoyant, but has slowed due to energy-sector weakness and economic uncertainty. While new orders rebounded, backlog orders fell for the sixth straight month and the strong U.S. dollar weighed on exports.
  • The U.K. economy expanded by 0.5% in the fourth quarter, according to provisional data. Hotels and restaurants contributed most, followed by business services and finance, while service sector output reached a 12-month peak. However, year-over-year growth fell to a three-year low.
  • Eurozone consumer prices increased by 0.4% in the one-year period ending January, according to preliminary data, reaching the highest point in 15 months. Energy price declines moderated, while non-energy industrial goods and services incrementally increased.
  • Japanese industrial production contracted by a disappointing 1.4% in December, its seventh decline in 2015. Consumer prices also slid during the month, remaining far below the Bank of Japan’s target rate.
  • The Bank of Japan announced the introduction of a negative interest-rate policy, which joins its recently-expanded asset purchase program in an effort to stimulate economic growth and spur inflation.

 

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