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In the Markets – Week-Ending December 30th

by Peter J. Creedon

Newsletter: In the Markets – Week-Ending December 30th
Crystal Brook Advisors
We Make Financial Planning Crystal Clear

United States: Consumers’ assessment of current economic conditions is now roughly in line with where it was prior to the presidential election. The present situation index fell 5.9 points to 126.1 in December, which is still a very strong overall reading. Most of the decline was due to a rise in the proportion of consumers stating current business conditions were bad which rose 2.1 points to 17.3 in December. That puts this measure precisely where it was prior to the presidential election. The proportion of consumers stating that current conditions were good fell 0.5 points to 29.2 percent but remains 1.7 points higher than it was in October. (1)

Europe: Leading the banking sector lower was Credit Suisse. The Swiss bank’s shares were down by more than 3.5 percent after media reports that U.S. authorities were investigating the sale of a bond to Mozambique, which instead of being used for tuna fishing has reportedly been used to buy military equipment. (2)  In Italy, economy minister Pier Carlo Padoan said that the recapitalization of Monte dei Paschi will start in two to three months and added that the plan to compensate retail investors has been agreed with the European Commission, Reuters reported. The bank’s shares have been suspended from trading since last week. All the other Italian banks were falling on Thursday, with Banco Popolare leading the falls. (2)

Asia: Japan’s core consumer price index (CPI) slipped 0.4 percent on-year in November, compared with the market consensus forecast for a 0.3 percent fall, while November household spending also fell 1.5 percent from the previous year. Meanwhile, the jobs-to-applicants ratio rose to 1.41 from 1.4 in October, its highest level since July 1991. (2) A Bank of Korea survey released Monday showed consumer sentiment plunged to its worst level in more than seven and a half years in December, amid a political scandal and volatile financial markets. (2)

Latin America: As a group, Latin American ETFs have been strong performers in 2016, although the recent trend has been lower. The Brazil fund is up almost 60% year-to-date, however, it is down 4.3% over the past three months. The Latin America fund is up nearly 30% this year, but down 3.9% over the past three months. The same trend can be seen in the Chile fund—up 15.4% this year; down 1.4% over the past three months—and in the SPDR fund, which is up about 26% for the year but down 3.1% over the past quarter. (3)

Monday 12/26
  • In Japan, auto stocks declined because of a stronger yen due to profit-taking pressure. A strong yen threatens to reduce profits exporters earn abroad. Toyota ended lower 1.4% at ¥6,991, while Mazda fell 1.9% to ¥1,974.5 and Honda declined 2.1% to ¥3,495. The Topix transportation subindex was down 1.5%. The USD/JPY was at 117.04 compared with 117.49 late Friday in New York. (5)
Tuesday 12/27
  • Boosted by technology stocks and housing, major U.S. Stock indexes closed higher despite slow post-holiday trading. (4)
  • The Nasdaq ended the day breaking a record. By the market’s close, it had reached 5,487 points, a gain of 0.45 percent. The Dow moved closer to a record 20,000 high reaching 19,945 by the time of the bell. (4)
Wednesday 12/28
  • All 11 of the S&P 500’s primary sectors ended lower on the day, while the benchmark index itself suffered its biggest one-day point and percentage drop since October. Financials and materials, two of the best-performing industries of late, were among the hardest hit, with both down about 1%. (3)
Thursday 12/29
  • Global stocks mostly fell in thin trading Thursday, taking their cues from Wall Street’s tumble on Wednesday. (6)
  • Benchmark U.S. crude fell 9 cents to $53.97 a barrel in New York. Brent crude, used to price international oils, was up 14 cents to $56.36 a barrel in London. (6)

Friday 12/30

  • U.S. stocks finished 2016 with a thud on Friday after all three major indexes ended the year with three straight days of losses for the first time since Nov. 4. (2)

Market Close

  • The index of 30 blue-chip stocks gained 13% in 2016 even as it fell 0.3% Friday to 19763 on the final trading day of the year. The S&P 500 added 9.5% this year, and the Nasdaq Composite rose 7.5% for their biggest gains since 2014. (5)
  • This year’s rally extends a bull market that has tripled the Dow industrials from their low during the financial crisis of 6547.05 in March 2009. Stocks weathered several shocks in 2016, including a recession scare, Brexit and the U.S. presidential election of Donald Trump. (5)

Contributor: Thomas Padula

Sources:  (1),Wells Fargo Economics (2),CNBC  (3),Market Watch (4),NPR (5),Wall Street Journal (6), CBS News