Anchor resume from 23 to 30 of June 2017

Anchor resume from 23 to 30 of June 2017

Ana Martínez

We conclude the month of June with corrections in the main equity markets, pressured downwards by a greater expectation of a change in the policies of the main Central Banks.

The main focus in the Eurozone was set on the ECB's annual conclave with the main leaders of the central banks. In his appearance, the president of the European Central Bank, unlike previous appearances, said that the reflationary forces for the moment had recovered ground on deflationary. Likewise, growth rates (as they have been showing in recent economic activity publications) were proving better than expected. Nevertheless, Draghi remained in his line defending a prudent monetary policy. Those words had an immediate impact on the markets, propping up the TIRs of the bonds (in benefit of the financial sector) as well as the common currency, but pushing down the equity markets, which are adversely affected by an increase in the cost of debt.

We expect those pressures to continue because the CPI data released on Friday was +1,3%, surpassing forecasts of +1,2%.

From the United Kingdom, we highlight the statements made by Mark Carney, who surprised the markets after announcing the possibility of withdrawal of monetary stimulus, leaving opened the door to a rate increase for the coming months. The factors that will be subject to this decision will be mainly domestic consumption, business investment, as well as the evolution of wages and the Brexit.

Markets in the United States closed without too much volume in view of the festive day of the 4th of July. However, we have important references such as the rebound in the latest GDP data (+1,4% in contrast to the +1,2% previous and expected). In contrast, the IMF reduced its forecasts for the region (now set at +2,1% from the previous forecast of +2,3%).

During the last sessions, declarations made by several members of the FED, such as Dudley or Williams, supported a tightening of monetary policy. It should also be noted that the main US banks have overcome the stress tests that the FED submitted to the entities. The capital plans of the financial institutions were also approved, allowing shares to be repurchased and opening the possibility to increase the dividends distributed, which is why US financial stocks starred a rebound during the last week.

Meanwhile in Asia, we still didn’t see signs of inflation in the Japanese country. Consumer price levels were below expectations at +0,4%, retail sales fell by -1,6% from the -1% expected and the previous data of + 1.4%. The governor of the BOJ (Kuroda) underlined that weakness in his statements despite enhancing the business profits obtained.

About the evolution of China has been somehow more positive, especially on Friday with the publication of the PMI data which stood on expansive ground surpassing forecasts; The manufacturing indicator at 51,7, while the service sector rose to levels of 54,9. As for growth forecasts for the Asian giant, the National Academy of Economic Strategy stood at 6,8% for the current quarter, being somewhat weaker for the year as a whole (+6,5%).

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