Profitability Reports of our clients from February 2018
Friday, 09 of March 2018
World Macro Panorama,
WORLD MACRO PANORAMA
EURO ZONE: Macroeconomic data continues to show strength in the economic bloc. The GDP of the last quarter of 2017 was 0.6%, for the full year the expansion was 2.5%. The contribution of Germany with a quarterly growth of 0.6% and 2.7% year-on-year and the best performance in Spain with a variation of 3.1% driven by consumption and investment stand out.
The composite PMI continues to show expansionary rates standing at 57.1, with a slight setback after having reached the 12-year maximum level in January.
The month of February was decisive in the political sphere, in Germany the re-election of the governability agreement was approved within the social democratic party, while in Italy, the elections were resolved with an advance of the Five-Star movement without reaching the majority as well that the center-right coalition. We believe that the results of the Italian elections will increase uncertainty for investors.
US: Inflation in January which was + 2.1% while core inflation was + 1.8%. In monthly terms it has been the largest variation since 2005.
The FED, in the publication of the minutes of its last meeting, showed a more optimistic perspective that would lead to increases in the interest rate for the next meetings. In March an increase to the range of 1.50% - 1.75%.
President Trump's recent announcements have affected the country's trade relations, following the decision to impose tariffs on imports of Aluminum and Steel.
UK: In the last quarter of 2017, GDP grew 0.4% below the estimates (0.5%). While in annual terms it stood at 1.7%. The strongest sectors were financial and transport services, while construction fell 0.7%.
Inflation continues at levels of 3%, mainly explained by the depreciation of the British currency.
The unemployment rate stood at 4.4% in the month of December, previous 4.3%.
A preliminary text was published with a summary of the agreements reached so far: Guarantees of the rights of citizens of EU countries resident in the United Kingdom and vice versa, the open state of the border between Ireland and Northern Ireland and the financial payments to be made by London after the 'Brexit'.
JAPAN: Trade balance in January cut the deficit to - JPY 943Billion (estimated JPY -1,002Billion) due to a 12% increase in exports compared to the previous month.
Retail sales (January) 1.6% per year (Estimated 2.6%, previous 3.6%).
CHINA: Maintains its GDP target at 6.5% by 2018 with an inflation target of 3%, according to the government's annual report.
The trade balance fell in January to 20.34Billones from 54.10Billones registered in December.
The CPI (January) 1.5% year-on-year compared to a previous figure of 1.8%.
Financial Markets (as of February 28, 2018)
We conclude a month in which volatility returned to investors' portfolios, with strong movements unleashed by favorable macroeconomic data in the United States, prompting the market to discount additional adjustments in interest rates by the Federal Reserve in the United States.
Despite the corrections, they were contained in most markets, and in the current year Wall Street remains in positive territory. In Europe, the corrections of the American market and the increase in the levels of volatility, kept the main indices with accumulated losses. The IBEX35 ended the month at around 9,840 points -5.37%, the CAC 40 did it at levels of 5,320 -2.46%, while the DAX, penalized by the political situation that had not been defined until the first week of March , fell -4.37% to levels of 12,435 points.
For its part in Asia, the setbacks were generalized above 5%, however so far this year the Hang Seng remains in positive territory with an advance of 3.09% and the Sensex in 0.37%. In case its part the Nikkei225 has had a setback in the current year of -6.12%.
In the currency market, the Euro fell against the US dollar after strong appreciations of the previous months, standing at 1.2193 at the end of February, while against the Pound, the single currency strengthened 1.11% to levels of 0.8862.
At the sectoral level, after the corrections, energy and non-cyclical consumption were the most affected, with falls of 10% and 6.96% respectively, while the technology sector had the best relative performance with a flat close at -0.5%.
In line with the equity assets, the commodities fell back in a generalized manner, the Brent reference oil stood at levels of 65.8 USD / barrel with a drop of -5.56%. while gold did it at -2.31% with a price of 1,317 usd / oz.
For the month of March, the markets will be very attentive to the meetings of the Central Banks. On the ECB's side, announcements are expected in reference to the balance sheet normalization process, while in the United States, the market expects a further increase in the interest rate. The 10-year US treasury bonds ended the month with a rate of 2,868%, with a variation of 9.5 bps, after the inflation data and statements by Jerome Powell, president of the FED. We consider that the announcements by the monetary authorities will mark the pace of the fixed income and risk assets market for the coming weeks.