Anchor resume from 11 to 18 of May 2018
Friday, 18 of May 2018
This week focus
Once again the political situation has been the focus of attention of investors. Uncertainty about oil production in Iran following the withdrawal of the United States from the nuclear agreement, the intensification of the US trade tensions with China and the European Union and the recent government agreement in Italy, have been the market catalysts for the last days.
The economic sanctions of the United States against Iran, has pushed up the oil price to US $ 80 / Barrel, which has raised concerns on the part of the different economic areas. The European Union has stated that the nuclear agreement must be maintained and invited President Trump to maintain open dialogue.
Meanwhile, European leaders also called on the US administration to negotiate current trade conditions in relation to recent tariffs. The end of the exemption period for aluminum and steel from Europe is approaching, and if an agreement is not reached, the European Union announced that it will defend its interests and take response measures.
Regarding the negotiations between China and the United States, a new session was held in search of commercial equilibrium as a continuation of previous meetings in which no agreements were reached. As a conciliatory gesture China announced that it will withdraw tariffs on US imports of sorghum, however the final results of this meeting are still unknown.
As for the Italian political situation, which has been carried throughout the week. The government agreement between the Five Star Movement and La Liga, reached after more than two months of political blockade, is a source of concern for investors, given that the coalition coincided in fiscal policies that will hinder the country's commitment to control the levels of current indebtedness.
Thus, the movements in the debt market were not long in coming, on the one hand the consolidation of US treasuries at 10 years above 3.1%, as a result of the increase in oil that has led to discounting an acceleration in the inflation data and therefore in the rate of federal funds; On the other hand, the increase in the Italian risk premium, which presented a movement of 15 basis points, pushing the 10-year bonds to levels of 2.11%. In a contagion effect, Portugal and Spain also suffered an increase in their spreads.
On the macroeconomic level, the CPI of the Euro Zone continues unreacted with a year-on-year variation of 1.2% while the preliminary GDP figure stood at 2.5% in line with consensus expectations.
On the other hand, the data in the United States were not favorable either, retail sales rose by 0.3% in April, after increasing by 0.8% in March, while industrial production had a variation of 3.5% per year (previous 3.7 %).
In Japan, GDP fell by 0.6% year-on-year in the first quarter after eight consecutive quarters to the upside, while the CPI continues far from the BOJ target with an interannual variation of 0.7% for the month of April.
At the end of the week, the main stock indexes closed in mixed terrain. The IBEX35 retreated to levels of 10,174 points, while the DAX advanced 0.91% at around 13,120 points and the Eurostoxx50 added 0.65% at levels of 3,588.
In the United States, investors preferred to maintain prudence in the face of the evolution of trade negotiations. Slight downward movements in S & P500 (-0.28) and the Dow Jones (-0.4%).
While in the currency market, the EUR / USD ended the week around $ 1,179 per euro (-1.25%) in a generalized strengthening of the US currency.