The present fiscal year comes to an end. Trade-24 teammates with market analysts and marketers decided to recall a number of interesting events, that affected the market in 2016. The main selection criteria were the two factors – the power of influence on the world markets and the critical factor, that were depending on the particular product or service. For convenience, the material will go in chronological order.
The collapse of oil prices
One of the important events of the year was the fall of the cost of ‘black gold’ to a critical level in 13 years in January 2016. For the first time, the price was at $ 28 per barrel, which was last recorded at the time of the Iraq war in 2003. The reasons for the fall in oil prices had a few – the beginning of the “shale revolution” in 2013, the transition of many countries on renewable energy, and, of course, the influence of Saudi Arabia on the cost of goods by dumping.
Because of these factors, the oil for the first time broke through the psychological level such as $ 30, but before the end of the year the price rose again to 55-57 dollars. According to the experts and traders, the cost increase is not expected in the next few years. In addition, the fall in prices has led to two consequences – oil glut in the market and the cartel of OPEC members on the number of daily production of ‘black gold’ in accordance with the quotas of each of the member countries.
According to our analysts, in 2017 such items as oil will be the center of attention of many investors and traders. The best option select purchase/sale of oil will be the financial situation in February-March, June-July, October and November. Also, we recommend you pay more attention to this product, as a general popularity is gradually changing to a decrease in the market over the past few years.
The terrorist attacks in 2016
On March 22, 2016 in the capital of Belgium, the terrorist act has happened, which killed 38 people, more than 340 were injured. After that it happened more than 40 major terrorist attacks, which resulted in a significant number of victims in the world.
According to Reuters news agency , on the period from January to December 2016 such attacks have killed more than 3,500 people, more than 11 thousand – were injured.
Market experts point out, that many terrorist attacks are committing by the market quite a serious jump in the price, and usually ends up either improve the position of “bulls” or rising panic. By mass buying or sale such traders are hoping to get more profit, despite the absence of any powerful tendencies to change prices.
One of the most influential events was the vote for residents of the UK’s withdrawal from the European Union on June 23, 2016. As a result of Brexit, more than 50 percent of voters said “yes”. Due to this information, the world market – in London and New York – has lost more than $ 3 trillion by two trading sessions. The slack gave even the strong British currency, which fell for the first time to the level of the crisis period in 1985. At the same time, gold became more expensive on than $ 100 per ounce of the arbitration – from 1284 to 1387 dollars.
According to experts, the main reason for such a sharp jump in the market was the result of the vote. According to The Guardian, the poll results two days before the referendum showed euro optimists’ victory by 1.5%. But as a result of the victory gained by EU skeptics. In addition, the market succumbed to a rather strong volatility in the price of gold and forex (pair EUR/GBP, USD/GBP and JPY/GBP).
Traders believe, that Brexit will still make an impact on the trends in 2017. In particular, a big hit will get UK economy, the banking and investment sector of the EU, the price of gold and precious metals. That is why market players should be attentive to the trade, some services and Eurobonds.
Presidential elections in the United States of America
A large share of influence on the American and Asian markets was given by the events of November 8, when it became known, that multi-billionaire Donald Trump was elected as the 45th President of the United States of America. This news shocked many experts and specialists, both political analysts and representatives of business, stock exchanges, investment companies. The reason for this were two aspects.
The first one is that, when Trump promises about changing the structure of production and sale of goods in the US economy, as well as reducing the tax burden on small and medium business, the support of major investments in the sphere of production revolutionary shale of hydrocarbons. The second reason lies in the future policy of the President in relations to the Asian market, regarding to the elimination of large enterprises from China, Japan, Taiwan and Vietnam.
According to experts, Trump’s many promises are only promises. However, the future owner of the White House, when he was the businessman, often kicks off his agents of influence from the projects and enterprises. At last, we can say for sure, that many businessmen have received a huge profit because of US presidential elections. It is also worth adding, that the election of the head of the world’s leading countries have raised many important market indices and the cost of commodities, such as Dow Jones, the US dollar index and short-term liabilities on the bank’s investment portfolio.
The change of Fed interest rate
One of the main events was the decision of the US Federal Reserve on December, 14th 2016, when the interest rate on short-term and long-term credit related commitments was raised from 0.50% to 0.75%. Such a decision was not a surprise, but many expected much more “hawkish” action by the country’s chief banking regulator.
Commenting on the establishment of such a step, the Fed Chairman Janet Yellen said, that this was due to a fall in purchasing power of the US dollar, its partial inflation and the impact of the cost of US certain services. However, analysts are inclined to believe, that the rate hike is a regular and scheduled, as the rate was untouchable for several years.
Market experts believe, that this may be the Fed’s decision touches the question – how to strengthen and undermine the US dollar. Further movement in the value of the currency will be entirely dependent on the Fed’s inflation targeting policy of non-interference in the pricing policy and the decisions of the Administration of the White House, regarding for the GDP and the debt of the country.
In the end, it is worth noting, that we have not included in the text of various main events, that have affected the market. These are OPEC’s decision on oil reduction, a number of changes in interest rates in many countries (New Zealand, Australia, Canada, Japan) and an increase in volume of US and Chinese debt commitments. However, in our opinion, these five events much more strongly responded to the global markets.
The experts, analysts and managers of Trade-24 company wish you Happy New Year. We wish you the further successful trading!