Profitability Reports of our clients from June 2016
Friday, 15 of July 2016
- Equity markets ended the week mixed with falls in their volatility levels. Widespread falls in Europe equity indices except within the FTSE100 which benefited from the weakness of the pound and rallied up a +6%. However, the rest were penalized due to the expectation of lower growth levels due to the BREXIT (-7% IBEX 35, DAX and EUROSTOXX50 -5%).
- The US closures finished in positive territory after the last date of creation of new jobs; advances of + 1.5% in the S&P500, while the Nasdaq Composite closed flat (+0.29%).
- Regarding to sectoral performance, the worst was the financial sector (-8%), followed by the Biotechnology and Cons. Cyc. (-2.8% and -2.24% respectively). On the other side, the sectors that benefited most were Gold & Prec. Metals (+9.3%), followed by Energy (+3.5%) and Utilities (+3%).
- Both the EUR and the USD benefited respect to the pound due to the expectations of a more lax monetary policy in the United Kingdom (the EUR rose up by nearly a +9% closing around the 0.8528) .adversely, common currency lost ground against the JPY due to the growing attractive as a safe asset.
- The IRRs government bonds remained under downward pressure with the exception of the Greek ten-year bond.
- Regarding to commodities, widespread gains among which we highlight the Gold (+9.9%). As an exception, the barrel of Brent lost a -5.8% maintaining levels below 50 USD/Brent.
GLOBAL MACRO PANORAMA
EUROZONE: after the ECB meeting, the reference rate remained at +0% and the expectations mentioned for the economy were positive. Growth forecasts were set at +1.6% and the purchase of corporate bonds began.
- Although the ECB Nowotny said that the phase on risk deflation had ended, other fronts opened in recent days (Brexit and Italian banking sector).
- It is becoming important the need to put policies in line with each country's monetary policy and curb the rise of populism.
- Given the weakening of political relations within the group, the EU rating was cut to AA from AA+.
USA: growth forecasts made by the Fed were reduced to +2.2%. In the same vein, expectations of corporate profits were cut by -4%.
- Rate hikes were discarded for July and the vision shown by Yellen was prudent. The evolution of weak growth, price levels and labor market was stressed.
- However, in the latest update of creation of non-farm employment, upward pleasantly surprised upward with the creation of 287.000 new jobs.
UK: despite the result in favor to the referendum for Brexit in the UK, the Article 50 has not yet been approved. However, negative consequences have been immediate, so the BOE recognized the economic downturn and announced an intervention through rate cuts in the coming months.
JAPAN: no changes in macro policy from Japan. According to forecasts made by Kuroda, Japan's economy is expanding at a moderate pace, inflation expectations were raised and he reiterated the need for implementing new measures to calm markets after the Brexit.
CHINA: Nomura cut growth forecasts until +6%. In the same vein, recent data pointed to foreign disinvestment and debt levels that suppose a +237% from the GDP.
- The Bank of China announced the possibility of dropping down the Yuan and possible rate cuts were anticipated in order to support economic growth.