Market Talk – December 31, 2015

Trading Community

It was a very dull day to finish 2015, but not really surprising given the performance we have seen for the year. Shanghai has finished the year up 9.4%, but it was the smaller Shenzhen Composite with a YTD gain of 63.2% that was the shining star. The Nikkei added to its annual gain by an additional 0.27% bringing the YTD to 9.3%. Meanwhile, the Hang Seng saw a small 0.15% daily gain but closed the year up +7.2%. Australia (ASX) closed the year down 2%.

Europe saw negative day across the board. DAX, CAC, and FTSE all closed lower (-1.08%, -0.86% and -0.51% respectively). Probably not surprising, but on the year the DAX was the best performer returning 9.5% and not far behind that the CAC returned 8.5%. In the UK, the story was very different with a negative 4.9% return for 2015. As you can imagine it was the Commodity Sector that made the dent for many markets. Shares in the large producers (Anglo American and Glencore) made a massive dent on markets as their shares had lost.

As you can imagine, the commodity sector made the dent for many markets. Shares in the large producers (Anglo American and Glencore) made a massive dent on markets as their shares had lost around 70% on the year. Worth a mention, as it is year-end, is the IBEX (Spain) as the market closes -7.15% for the year but was trading with a gain (in April) of almost 19%.

After a weak opening, the U.S. market has regained over a hundred and fifty point drop and then gave it up for the close with the DOW closing below last year’s closing, warning that it is not ready still for a breakout to the upside most likely putting it off until 2017-2020.

The U.S. dollar’s performance has been the talk of many a market and not least against other currencies. The euro lost over 10% having started the year north of 1.1950 while finishing it under 1.09. Against a basket of currencies, the USD, in general, has returned around 9% for the year.

In the bond market, we saw more flattening (marginally) with a 1-3 basis point lower yield across the curve. 2s are closing the day around 1.05% with the rest of the curve as follows: 5s at 1.76%, 10s at 2.27%, and 30s at 3.01%. For the year, the 10yr note has risen around 15BP whilst 30’s has gained 32BP. 5yr notes have gained 19BP and 2s added 45bp’s for the year.

Finally, gold has fallen back but held the 1044 number for the year-end closing. Silver’s significant ground closing was well below its year-end number, indicating that the deflationary wave is still in motion. Oil held the $35 number, closing just over $37. This will leave $40 as the critical pivot point for the new year.