Anchor resume from 10 to 17 of November 2017

Anchor resume from 10 to 17 of November 2017

Ana Martínez

The policy took an important role in the United States due to the vote of the tax reform presented by Donald Trump in the House of Representatives, which involves a tax cut of 1,4 billion that will mainly benefit large companies. This proposal was approved on Thursday by 227 votes to 205. Now, it will have to go through the Senate filter.

As we have observed during the last sessions, the market is following closely the developments regarding the application of the proposal. The reason is that the rallies that have experienced the main American selective had been based on the approval of the law submitted to vote. That is why, rejection of the proposal, could cause the beginning of a correction in the North American stock markets, dragging the main stock markets in Europe.

Leaving aside the political issue, the macroeconomic environment remains favorable. In fact, the growth forecasts made by the Philadelphia FED for the 4Q of 2017 became improved to +2,6% from the previous data of +2,3%, weekly requests for unemployment subsidies were kept low and Weekly requests for mortgages grew by +3% (vs. +0,1% expected). For the time being, the next reference date will be between December 12nd and 13rd, when the last FED’s meeting of 2017 will take place, and in which a new rate increase is expected. Likewise, Harker of the FED in his last statements affirmed that he sees a place for three new rate increases within 2018.

In Europe, the words of Mario Draghi after the meeting with the leaders of the main Central Banks were followed very closely by the market, however, its effect was limited. In his statements, the ECB leader welcomed the effectiveness of the policy of "forward guidance" which is used to drive expectations in the markets. Regarding the vision of the region, it remained favorable, and confirmed the sustained growth of the economy and confirmed that monetary policy will continue to be lax due to the low growth of wages and core inflation.

The data that was disclosed reflected the ECB's view, the latest German CPI data remained at +0% and the GDP rates at +0,6% during the 3rdQ. The IMF placed the expected growth rates for the Eurozone at +2,1% for 2017, and at +1,9% for 2018.

The EUR/USD pair is situated at the time of the report around the 1,179 EUR/USD benefited by the situation in the US. While the main selective ones finalized the session with slight corrections, the DAX-30 maintaining levels of the 13.000 that had lost during the week, and the IBEX-35 in the 10.000. The Eurostoxx-50 for its part, ended up quoting around 3.551.

From Asia, October activity data in China showed some slowdown; Industrial production was slightly below the +6,3% expected. From the Central Bank of China on the contrary, massive liquidity was bombarded the financial markets (10 billion yuan according to Bloomberg). The selective Hang Seng on the other hand, scored new advances, ending in the 29.200. While the Japanese Nikkei-225 did around 22.396 after submitting corrections from maximum levels.

No news for the commodity markets. The barrel of Brent corrected to levels of 62 USD/Brent after the latest advances, and the ounce of gold remained at levels of 1.285 USD/Oz.

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