Profitability Reports of our clients from February 2017

Profitability Reports of our clients from February 2017

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GLOBAL MACRO PANORAMA

EUROZONE: In his last appearance Draghi appeared to be in favor of maintaining the monetary stimulus. On the contrary, the expansionary rates published within the economic indicators and the rebound in price levels, could lead to changes in the ECB's discourse.

We identified the main risks in France and Greece. While in latest surveys run in France pointed to Macron as the favorite in the presidential elections, Greece saw its credit rating downgraded to CCC.

Regarding the macroeconomic situation, the advances in the leading indicators of manufacturing activity were maintained, with the expansion rates reinforced. Likewise, the positive outlook for the region was accompanied by price rises, which already reached the target level of the ECB (+2%), which could anticipate reductions in ECB buying levels.

USA: No changes in the interest rates after the last FOMC’s meeting.

The probability of rate hikes increased by 84% after the new plans announced by Donald Trump and the latest statements made by the FED members.

Likewise, the activity indicators kept the expansion rates (Manufacturing ISM at 57,7) and unemployment rates remained at minimum levels.

UK: the Bank of England published optimistic growth forecasts for the region (+2% in 2017) which does not seem to coincide with investor expectations or with the latest published data 

Overall, retail sales decreased by -0.3% during the last month, as well as indices of manufacturing activity and services. Despite the fact that those continued to show clearly expansion rates, they were unable to maintain the levels that they were presenting (now at 54,6 and 53,3 respectively)

JAPAN: positive growth forecasts for 2017 (between the +1% and +1,5%).

As far as monetary policy is concerned, it is expected that the policy of control of the yield curves will be maintained.

CHINA: China's central bank expectations were positive, placing expected growth at +6,5% by 2017. While Goldman Sachs analysts warned of the country's high leverage.

No substantial changes in the region. Growth rates remained positive around +6,5%, the leading indicators of manufacturing activity continued to strengthen with the latest published figure of 51,7. Likewise, exports rose by + 7.9%, while imports increased by + 16.7%.

On the negative side, we highlight the decline in the PMI of the services sector (now at 52,6), a highly followed figure since it is key to monitor the evolution of the growth model change.

FINANCIAL MARKETS

The rallies surpassed the +5% in the EUROSTOXX-50 and the IBEX-35 (which are now trading around levels of 3.403 and the 9.798 respectively), while the DAX-30 increased a +4,27% surpassing the resistance located in the resistance levels of 12.000.

Historical highs were reached in the United States after the rises above the +5% in the Dow Jones and the +4,57% in the S&P500, while the technological Nasdaq Composite already summed up a +10,48% YTD (now in the 5.870).

The progress made in Asia has been more moderated; +2,25% in the NIKKEI-225 up to the 19.469. 

The most benefited sectors were the Biotechnological (+7,30%) and Healthcare (+6,62%). While falls in the price of gold and precious metals increased, adding falls in the sector of +3,45%. 

Higher expectations that the Fed make further rises in rates led the US currency to post new gains, now at 1,062 EUR/USD, while the pound suffered further falls (up to the 0,864 EUR/GBP).

Although the IEA announced that a 94% of the agreed cuts had been made effective, crude remained at 55,9 USD/Brent without further progress.