Profitability Reports of our clients from December 2016

Profitability Reports of our clients from December 2016

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GLOBAL MACRO PANORAMA

EUROZONE: The ECB maintained unchanged reference rates and the monetary policy applied, indicating April of 2017 as the date on which asset purchases will be reduced to 60,000 million euros per month, while the door will be left opened to new QE increments in case of need.

  • The Italian Prime Minister Matteo Renzi resigned after his defeat in the referendum for a constitutional reform.
     
  • The Italian government has approved a provision of € 20 billion to be injected into those financial institutions with recapitalization needs after that the ECB estimated in € 8.8 billion of new capital the needs of Monte dei Paschi to operate correctly.

USA: in line with expectations, the reference rates were raised by 25 bp. Yellen announced as well three rate hikes for the current year and the expected growth forecasts stood at +2.1% for 2017.

  • The OECD perspectives for the region remained positive as well.

UK: the UK’s ambassador within the European Union resigned unexpectedly months before formal negotiations began to address the Brexit, where its presence played a significant role.

JAPAN: monetary policies applied remained without changes and growth forecasts remained moderated, although the improvement in exports and production forecasts has been noteworthy.

  • Kuroda increased inflation forecasts up to the +2% on the improvement in private consumption, although it did not deny the risk of deflation. It is expected that new policies will be implemented

CHINA: China's Central Bank faces complications due to strong capital outflows, prompting the country to sell currencies and introducing conditions to the conversion of currency within the country.

  • The Chinese government is expected to abandon the +6.5% growth target over the next two years in order to avoid potential asset bubbles.

FINANCIAL MARKETS

  • Strong gains in the main selectives led by the European stock exchanges with rallies of +10% in the IBEX-35, the DAX-30 and the EUROSTOXX-50 closing at 9.515, 11.599 and 3.321 levels, respectively.
     
  • In the US, we highlight the gains recorded by the NASDAQ Comp (+5%) and the +4% in the Dow Jones, now trading at 5.521 and 19.963 respectively.
     
  • In Asia, while the Nikkei went a +5% up, the Hang Seng closed the year flat at levels of 22.503.
     
  • Generally, levels of volatility remained at its minimum (of 11) although we anticipate new rebounds against the opened fronts (European elections, policies implemented by Trump, Brexit, etc.).
     
  • At the sectoral level, the progress was generalized, with the telecommunications sector gaining a +7,70%, followed by the Technologic one  (+6,40%) as well as Biotechnology and Healthcare (+5%).
     
  • During December, the dollar became benefited from growth forecasts and the fiscal stimulus that Donald Trump is expected to apply in the US economy so that the USD climbed up at 1,0530 EUR/USD (-1.31% ). On the contrary, the EUR maintained the advances against the pound now around the 0.857/GBP (+ 2.29%).
     
  • As for commodities, the Barrel of Brent continued to rise a +4.85% until levels of 57 USD/Brent thanks to new measures to cut production levels among the OPEC members.