Friday: 5 Things Markets Will Be Talking About

The Bank of Japan disappoints, Spanish voters prepare to head to the polls and oil is back below $35. Here are some of the things people in markets are talking about today.

1. Bank of Japan confusion

It briefly looked like the Bank of Japan was embarking on a major new easing program when it announced it would establish a new program for purchases of exchange-traded funds. Once investors figured out that the details of the plan amounted to pretty thin gruel, markets reversed, with the Topix ending the session 1.8 percent lower, having rallied as much as 2 percent immediately following the announcement. On the flip side, the yen is one of the top currency performers today after having weakened briefly after the BOJ announcement.

2. Oil back under $35

Oil slipped back under $35 a barrel as the dollar strengthened in the wake of the Federal Reserve’s interest rate rise. West Texas Intermediate for January delivery was at $34.74 a barrel on the New York Mercantile Exchange, down 21 cents, at 11:10 a.m. in London. The continued mild winter is also keeping pressure on energy prices, with natural gas in the U.S. hitting 15-year lows.

3. Hedge fund woes

2015 has not been a good year for the hedge fund industry. Total closures in the first nine months of the year were at 674, with 257 of those coming the third quarter. Hedge-fund assets contracted by $95 billion to $2.87 trillion during the quarter, HFR data showed, the most since the fourth quarter of 2008. Funds involved in industrial metals have been particularly hard hit by the commodity rout, with one of the survivors saying the worse may be to come.

4. Kiev plays chicken

Ukraine has announced it will default on a $3 billion bond payment due to Russia on Sunday, defying Russian threats to take it to court if the payment is not made. The two countries have remained at odds over the payment, which the International Monetary Fund has said qualifies as an official claim, as the payment relates to debt Russia bought from Putin ally and former Ukrainian President Viktor Yanukovych two years ago, just months before he was toppled.

5. Spain prepares to vote

Spain’s general election on Sunday, which is unlikely to lead to a parliamentary majority for any one party, will be closely watched for any threat to the current benign euro-area environment. The (less radical these days) Podemos party has been staging something of a resurgence in recent polls, but still falls far short of repeating Syriza’s victory in Greece. The pro-market Ciudadanos, which is also fighting its first national election, may prove kingmakers following the vote as their pro-European Union, pro-business stance is close enough to Rajoy’s party to make that seem a natural coalition. Voting closes at 8 p.m. local time with exit polls expected soon after.

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments.
He has a deep understanding of market fundamentals and the impact of global events on capital markets.
He is respected among professional traders for his skilled analysis and career history as global head
of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean
has played an instrumental role in driving awareness of the forex market as an emerging asset class
for retail investors, as well as providing expert counsel to a number of internal teams on how to best
serve clients and industry stakeholders.
Dean Popplewell