Financial Markets Year-End Ghosts: Oil, Ruble and Greece

Financial Markets Year-End Ghosts Oil, Ruble and GreeceThe first, the rise in interest rates by the Federal Reserve, was put in a quiescent state by the Federal Reserve. Last week was characterized by the “patience” of the Federal Reserve about the first rate hike. The Fed governor, Janet Yellen, also stated that for at least the first two meetings of 2015, i.e. January 28 and 18 March, the Fed is “unlikely” to begin the process of rate normalization.  “The approach to the slow rise in interest rates – said Michael Hewson, market analyst at CMC Markets chief UK – has pushed the US stock to the new highs.”

The second ghost, the election of President of Greece, was almost ignored by the markets. However, it could reappear soon on the scene. A non-election by 29 December of Stavros Dimas, a former European commissioner candidate from the majority, would lead to early elections in early 2015. It would be followed by a phase of very unhealthy instability for the European markets.

The third ghost remains on the scene but it’s a bit less fearsome than before. The price of a barrel of oil seems to have found a floor to the descent. “At least in the short term – says Hewson – this stabilization may allay fears that further descend should cause substantial losses for producers of oil with a high degree of debt.”

Black gold is still a special surveillance: “If the fall in prices should resume, the ensuing instability would involve countries such as Venezuela, Angola, Nigeria, Ecuador, to say nothing of Russia.”

Closely related to the issue of oil is also the trend of the ruble, “which continues to remain under pressure despite the rise in interest rates (650 basis points) made last week by the Central Bank of Russia. The words of the Russian President Putin during the press conference last Thursday did not appear conciliatory towards Western partners who, moreover, have dismissed the possibility of an easing of sanctions. Indeed, the United States has adopted new and tougher measures along with a package of military aid by $350 million for Ukraine.

The final octave of Wall Street was rising. In New York, the day on Friday ended with the Dow Jones index in moderate progress by 0.15% to 17804.80 points, while the S&P 500 recorded an increase of 0.46% at 2070.66. A positive sign for the Nasdaq 100 that finished trade at 4765.38 (+ 0.36%).

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