Anchor resume from 8 to 15 of June 2018
Friday, 15 of June 2018
This week focus
Central Bank of the Republic of China,
English Central Bank,
Monetary policy decisions were the focus of attention during this week. The first was the Federal Reserve, which increased the rate range to 2%, a move based on current economic conditions and inflation expectations. The announcement did not come as a surprise to the market that already had this movement widely discounted, however the projections of the FOMC members now point to two additional increases before the end of 2018.
As for economic forecasts, the United States GDP estimated for the current year increased to 2.8%, inflation is also expected to continue rising and the unemployment rate to continue falling in 2018 and 2019; therefore, the members of the committee do not rule out a greater pace in the path of increases.
For its part, the European Central Bank was the next to communicate its decision, after its meeting resolved to extend the stimulus program until December 2018 reducing purchases by 15,000 million euros per month from September. In addition, it announced that it will maintain its balance sheet and reinvest the maturities while maintaining liquidity facilities in the market.
With regard to interest rates, Mario Draghi announced that a rate hike has not yet been discussed within the committee; Growth forecasts are weaker with an estimated GDP of 2.1% for 2018 lower than projected in March when a growth rate of 2.4% was expected. Regarding inflation, expectations are 1.7% for the current year given the changes in the price of oil and the exchange rate; which supports the decision of the monetary entity, concluding that, although economic recovery is on track, financial conditions must still be comfortable to support growth.
The monetary decisions in Europe and the United States contrasted with the positioning of the central banks in Asia that chose to maintain their current policy unaltered; The Bank of Japan will maintain its accommodative monetary stance, in order to achieve its still distant inflation target and face the current economic contraction. For its part, the People's Bank of China maintained interest rates stable, a decision that surprised the market, given that the last movements of the entity were usually preceded by rate increases in the FED, maintaining the sovereign debt differential unchanged respect to the United States.
Given this scenario, equity markets in Europe reacted positively applauding the position taken by the ECB amid the political tensions and trade difficulties that threaten the growth of the region. The gains were led by Germany with a weekly advance of 2.68% in the Dax30 index, followed by the Eurostoxx50 that advanced 2.06% while the Ibex35 reached 9,888 points adding 1.45% weekly.
For its part in the United States we have mixed closures, the S & P500 finished around the 2,782 points with a slight weekly variation of 0.12% while the Dow Jones fell -0.56% to levels close to 25,175 points.
Meanwhile the Nikkei225 ended the week at 22,738 points registering a variation of 0.19%, while the Hang Seng decreased -1.67% to 30,440 points impacted by the effective imposition of tariffs by the United States on more than 800 Chinese products by value of 50,000 million euros.
Despite the optimistic reaction of the markets, the risk factors persist, highlighting the deterioration of the US trade relations with China, the European Union and its American partners and the expected reprisals by the Chinese government at a time when understanding is necessary in the face of negotiations with Korea. On the other hand, in the Eurozone, the fiscal proposals of the new Italian government will continue to attract the attention of investors, which will generate pressure in the debt market despite the apparent stabilization of risk premiums in Italy, Portugal and Spain.
In the currency market, the EUR / USD fell to levels of 1.1595 dollars per euro with a weekly variation of -1.45%; With respect to the British Pound, the euro depreciated to 0.8724 levels after the announcements of the ECB. For its part, commodities barely registered movements, gold finished the week at around 1,301.8 USD / Oz with a variation of 0.3% while oil closed at 75.9 USD / Barrel falling -0.68%.
Over the next week the main members of the central banks will issue statements, in addition we will be attentive to the monetary policy meeting of the Bank of England and the OPEC meeting in which the current production agreement will be reviewed.