Our Market Analysis : 09/12/2017

The week was marked by the rebound in European indices with a rise of + 1.39% for the Stoxx600NR which outperformed the S & P500 (+ 0.8%) while the technology stocks were attacked at the beginning of the week, before finally bounce.

The rise in European markets was supported by banks (BNK: + 3%) which benefited from the conclusion of a preliminary agreement between the United Kingdom and the European Union, on the conditions of exit from the country which opens the way to a new phase of negotiations.

At the same time the Euro / USD fell this week to settle around 1.175 which reinforced the European indices and is explained by the solid statistics of November US employment. The unemployment rate remained stable, according to the Labor Department, while average hourly earnings gained 5 cents or nearly 0.2% over a month, to 26.55 dollars, its highest level of the year. These solid numbers, however, did not really convince the markets of an acceleration in monetary tightening by the Federal Reserve. The 10-year US rate is around 2.37%, slightly up on the week.

The week's losing assets are mainly commodities, with copper losing 4% while worries about China and overcapacity of its smelters resurface.

Commodities under pressure (CRB - Lyxor Commodities ETF) : weekly data

Gold loses more than 2% this week due to higher risk appetite, some optimism for the US tax plan and good economic statistics.

Bearish break out on Gold (IAU - iShares Gold Trust) : weekly data

At the stock level, the week was marked by the scandal over the South African firm Steinhoff which fell more than 80% due to accounting irregularities which caused a fall in the South African index (EZA: -3.75 %). Volatility almost absent from the indices seems now to focus on a few stocks that are punished by the market.