Profitability Reports of our clients from January 2017

Profitability Reports of our clients from January 2017

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WORLD MACRO PANORAMA

EUROZONE: the evolution of the economic area continued positive for the whole. The latest published inflation data led to an increase in the ECB's 5-year estimates (which stood slightly below the +2%).

After the meeting of the Eurogroup, the reference rates remained unchanged (at +0%) as well as the QE levels (80.000 million Euros). However, there exists a growing disagreement in reaching consensus on monetary policy given the good macroeconomic data published.

As a negative aspect, we maintained in the spotlight the risk that could suppose the rise of nationalist parties within the Eurozone.

US: The Fed was again cautious and decided not to move tab, waiting to hear the fiscal policies implemented by the new Government. The rates remained unchanged too at +0,5 – 0,75% as expected.

The labor market stood strong, while the growth of continued moderated. The economy is expected to maintain growth rates at +2,3% during 2017.

We will maintain the uncertainty that the policies that Donald Trump could decide to implement and the consequences those might have on the global economy.

UK: The UK ambassador in the EU resigned from his job before talks to tackle Brexit were started.

In her last remarks, Theresa May showed her willingness to reach mutually beneficial agreements with Europe, which helped to reduce the fear of a Hard Brexit. We are waiting for the Brexit vote in the “Cortes de Lores”.

The economic developments maintained the expansion rates and the economy is expected to grow at rates of +2,7%.

JAPAN: Kuroda maintained the positive outlook for Japan and kept unchanged benchmark rates at -0,1% defending negative rates to reach inflation targets.

The BOJ announced that salary increases and consumer prices are expected, with an expected growth of +1,4% for 2017.

CHINA: China's growth forecasts published by UBS set the expected growth levels at +6,4% for 2017

On the contrary, we highlight the strong fall in exports of the Asian giant (of -6,1% from the -3,5% expected).


FINANCIAL MARKETS

The main European selectives closed mixed in the absence of catalysts and the numerous uncertainties in the region. The IBEX-35 failed to recover the levels of 9.500 despite gains of +1,18%. The DAX-30 closed at 11.651 (+1,48%), while the STOXX-50 closed finished at levels of 3.273.

The trend in the US was more positive, marked by the publication of results with an average of growth in the BPAs of +4,7%. The main selectives maintained their levels at maximums; the DOW JONES at 20.071 (+1,56%), the S&P500 at 2.297 (+2,62%), while the Nasdaq Composite went up by +5,27% reaching the 5.666 levels.

For the emerging markets, gains were generalized, with a +6% of growth in the Hang Seng (now at 23.348) and a +6% in the main Indian selective (SENSEX).

As regards for the sectoral equities, the greatest benefits were found in Gold & Precious Metals (+13%), Materials (+6,75%) and Biotechnology (+4,91%).

The expectation of higher inflation and lower central bank balance sheet expansion brought the rebounds of the TIRs of European government bonds.

As for the currency, the Euro benefited the most from uncertainty in the US and the UK, leading the EUR/USD to 1,0781 (+2,55%) and the pair EUR/GBP up to 0,8632 (+1,34%). The JPY benefited from the fact that it is one of the refugee currencies, scoring +3,57% against the USD (now around the 112,7 USD/JPY).

The doubts about that the main OPEC producers maintain the production levels agreed, made the price of crude oil to remain around the 56 USD/Brent. Conversely, the gold benefited from the latent uncertainty in the market, rising to 1,219 USD/Onz. (+6%).