Market Action

• Several major global markets netted gains thanks to a rally by the end of the week. Equities followed Mario Draghi’s lead after the ECB President hinted at more stimulus due to falling inflation expectations in the Eurozone. Other stimulus chatter from China and Japan helped rally respective markets.
• China recorded its slowest GDP growth in 25 years. The official rate of 6.9% for Q4 is within the government’s target but private estimates have the economy growing as slowly as 4%. Authorities pumped in $60 billion in liquidity to address capital flight and people seeking cash ahead of the New Year.
• The International Energy Association warned that the oil market may “drown in oversupply.” The statement, along with elevated crude inventories in the U.S., pushed WTI to its lowest level since 2003. Oil rallied to close the week thanks to stimulus expectations from central bankers.
• Currency markets have been speculating that decades old pegs to the dollar in Hong Kong and Saudi Arabia are both at risk. Both currencies have fallen dramatically due to capital flight and the Kingdom’s plight from falling oil respectively.
• David Cameron, Wolfgang Schauble and other leaders have been lobbying public and private figures at Davos in an effort to make sure Britain stays in the EU. Cameron is preparing to launch a referendum campaign with an arsenal of corporate and public support.
• Canada lowered its growth prospects for the next two years. The collapse of oil prices has made a large portion of oil resources uneconomical and the currency reached its lowest point in over 10 years. Newly elected PM Trudeau has pledged to run deficits to boost the economy.
• Several American sanctions placed on Iran were lifted this week, giving the country access to assets and capital that had been locked for decades. Energy analysts estimate that Iranian oil production will add to a global supply glut in spite of low prices.

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