2016 turned to be full of surprises. It was fascinating with ambitious, adventurous, sometimes irritable and sizzling characteristics. Stocks recovery from the worst-ever starts, Brexit, Trump, oil, central bankers intervention. I may say it was an extremely interesting year all along the way and here are the events that labelled 2016 and shaped the financial markets.
The brutal year start ever. During the first ten days of January Chinese stocks plummeted and caused deterioration on markets. The world was somehow hammered by fears about China’s economy turmoil and the weakening of Chinese Yuan. What actually happened with Shanghai Composite Index:
Of course stock markets tumbled world-wide, many companies suffered and experienced their worst start to a year. A kind of huge anxiety on markets. The shares of some companies marked huгe declines. Here they are:
What shivered the markets at the end of January was the slump of oil prices. Crude oil prices hit a remarkable low at $27.88 a barrel and provoked sell off in energy sector shares and bonds, high-yield debt and all considered as risky assets.
The next jitter was served by the Bank of Japan, when at the end of January announced that will keep the negative interest rate policy. This mirrored in investors withdrawals and facing higher-yielding euro zone, UK and US dept.
The next and genuine shock for the markets was Brexit. The UK’s vote rocked global markets and something very bad happened. The Sterling dropped with 11% during the referendum day and $3 trillion was wiped out from the global stocks the next two days. The GBP/USD pair suffered most and marked a very very murky year. What actually happened with the Cable is clearly seen on this chart:
In the middle of the year some glitters shines over the markets. Throughout July and August S&P 500 set all time highs. The US economy growth is improving and is stable and boosted Wall Street. The uncertain political climate was fading away, the sun started to shine over the global stocks and led their way to finish the year in the green.
In September the shares of Germany’s biggest bank dropped to lowest levels for decades after the US Justice Department proposed that the bank must pay $14 billion to settle mortgage-securities probes coming from the financial crisis. The domino effect was inevitable. Another European banks grasped the weak economy.
In November the focus was set on the US presidential elections. The most contentious race was about to be won by the Democratic candidate Hillary Clinton. Well it didn’t happen and markets hardly digested this shock, because what was expected speaks much:
Well the shock was short lived and market participants welcomed the game changer and cheered the implementation of fiscal stimulus, taxes cuts and the rolling back on regulations for the US business.
Wall Street equities have moved to higher levels. Selling of bonds motored further after the Federal Reserve announced that will act more aggressive and will take actions for rate hike next year.
Further on markets faced the non-Opec producers agreement in late November.The global supply glut was an enormous pain, but finally we witnessed a solution. And in fact the cut in December contributed to the return of Opec and even boosted the oil prices.
Well it seems that we're living in interesting time and I'm curious what next year is going to bring.