■ Shanghai’s SSE index loses over 5% amid brokerage firms’ investigation

■ U.S. equity markets trade sideways in shortened weekly session

■ European equity indices in the green amid expectations for more ECB QE

■ EUR/USD visits lowest levels since April ahead of ECB and Fed rate announcements

Chinese concerns shook market participants again, this week, serving as a reminder that a scenario such as August’s “Black Monday” was still quite feasible. Shanghai’s SSE 180 index lost 5.13% on Friday’s session, amid reports that some of the country’s brokerage firms were under investigations by authorities. Similar to August, the negative impact from China soon trickled offshore with a negative opening in European markets – The DAX opened with more than a 0.6% decline at the start of Friday’s session, and the CAC 40 declined by more than 0.7%. This negative sentiment, however, soon corrected, sending major European indices closer to their levels at the start of the day. By the time U.S. markets opened, later that day, the negative mood from China has dispersed, with the daily session kicking off by hovering between the green and the red.

The evident resilience in western markets makes some sense considering the significant policy announcements due this week. Namely Thursday’s ECB rate announcement, the U.S. ADP and nonfarm prints, and the lurking, December 16th Fed rate announcement. Subsequently, it would take more than the butterfly’s flapping of some negative sentiment in China to invoke a global hurricane in European and U.S. markets. On a weekly perspective, the U.S. S&P 500 added a tiny 0.05%, in a Thanksgiving-trimmed 3.5 day weekly trading session. The Nasadq added a more respective 0.44% and the Dow lost 0.14%. Europe presented stronger performance in weekly perspective with the DAX adding 1.82% during the week, the CAC 40 increasing 0.84% and the FTSE increasing 0.64%. Much of the weekly gain in Europe was attributed to the dissolving of geopolitical concerns around Wednesday, following indications that the downing of the Russian fighter jet would not lead to further escalation.

Sometimes equities are the safer asset

While equities continue to exhibit rather stable performance, currency markets are becoming more volatile as Fed, ECB policies are expected to diverge further. In total, EUR/USD decreased 0.5% during the week. Touching a level of 1.0566 on Wednesday marked the lowest for the currency pair since April. The CHF also proved to be a significant underperformer this week, with USD/CHF adding 1.14%, to 1.0298. 0.6% of the CHF’s weakening was recorded on Friday amid speculation that the Swiss National Bank would follow the lead of the European Central Bank and weaken its currency.

Gold prices also continue to decrease – the metal of kings lost close to 2% this week. At USD 1,057.45 per oz, gold prices mark a new six year low.

Similar to the stagnation seen in equities, oil prices have been trading mostly sideways this week, losing USD 0.19 per bbl, to 41.71, as traders await to see if OPEC will announce a cut in production in its meeting on Friday.