Profitability Reports of our clients from August 2016
Wednesday, 07 of September 2016
GLOBAL MACRO PANORAMA
EUROZONE: Although Germany ruled out any impact on the German economy due to the Brexit, both the ECB and the IMF pointed out the opposite. Thus, growth forecasts set by the International Monetary Fund were reduced up to +1.4% (from previous forecasts of + 1.6%).
- Interest rates remained unchanged at +0% as well as the QE program will prevail until March 2017. In the same line, price expectations were kept low in the long term. The growth was positive, being mainly supported by domestic consumption.
USA: Yellen said that forecasts for growth and inflation were positive, and supported a gradual rise in rates. In contrast, the latest data published concerning the labor market dispelled those expectations.
UK: Given the worsening macroeconomic data, the BOE recognized the economic decline of the country. Thus, a cut in benchmark rates was implemented, placing them at +0,25%, and decided to increase the asset purchase program up to 435000 million GBP.
- The rating agency S&P downgraded the credit rating from UK because of the potential economic deterioration, while the IMF lowered its growth forecast to +1,7% from +1,9%.
- Upturns in manufacturing PMI due to increases in exports (benefiting from a cheaper pound).
JAPAN: Introduced a new package of economic and budgetary measures that will boost growth by +1,3% (between some of them, bonds with maturities of 40 years).
- Growth levels continued at very low rates (+ 0,2% in the 2T16).
CHINA: numerous debt defaults in China, the latter a shipbuilder (in this case the default would be of 400 million of yuan).
- The Bank of China rejected the need to cut rates despite acknowledging that the recovery of the giant is still lower than expected.
Strong progress was made during the holiday period between the major European markets, led by the German DAX (+ 11%). Other markets increases were recorded close to +8%, highlighting the STOXX50, which regained the psychological level of 3.000.
US markets continued recording maximum levels; the S&P500 trades around the 2.179 (+2,35%), while the Nasdaq Composite rallied up by +5,90% closing at 5.259 levels. However, the greatest advances were found in Asia; being of +13% in the Hang Seng, and +12% in the Nikkei225.
We must highlight the low levels of volatility; negative despite the high latent uncertainty Brexit trend, the evolution of the US economy and the slowdown in China remained (among others).
Cyclical sectors performed better than the defensive ones. While Technology, Financials and Materials went up by +13%, +8% and +7% respectively. The Utilities and Healthcare sectors fell down -3% and -1,6%.
The EUR recovered ground against the USD (+0,9%), despite the strong volatility derived from the statements made by the FED and the ADP data, which was released last Friday. The EUR made progress as well with respect to the JPY due to the BOJ's inability to boost the economy. By contrast, the pound rallied up by 1,5% after the improvement made by the main indicators of the activity.
As for the government fixed income market, falls in risk premiums were widespread. However, we note the rise in German bond IRR which would be offering yields -0.039%.
No movements to highlight in the commodities markets; the barrel of Brent remained below levels of resistance of the 50 USD/Brent, while the ounce of gold fell by -3%.