Profitability Reports of our clients from March 2018

Profitability Reports of our clients from March 2018

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GLOBAL MACRO PANORAMA

EURO ZONE: Activity surveys showed moderation after reaching maximums in January 2018, the appreciation of the Euro against the dollar, which has exceeded 2% so far this year, is one of the main factors that has weighed in the surveys in addition to commercial tensions.

The German indicators, especially the Manufacturing PMI, is one of the most affected due to the strong dependence on global trade, just as the IFO indicator has fallen for the second consecutive month.

The ECB did not change its interest rates, however the message reinforces the possibility of a less expansionary monetary policy, the market has begun to discount the withdrawal of stimuli by the end of 2017.

USA: We have the publication of the final GDP for the last quarter of 2017, which was revised upwards by 2.9% (2.3% per year); the components that raised the data were private consumption and business investment.

The FED increased the benchmark rate by 0.25% in line with expectations, given the improvement in economic activity and the expectation of a convergence of inflation towards the 2% target. The central scenario of both the market and the forecasts of the FED is that during the year there are two additional increases.

Trump's protectionist measures continue: The first of the measures was the introduction of tariffs on steel and aluminum, afterwards they focused on China after an intellectual property investigation. So far there are no measures that directly affect the Euro Zone.

UK: The Brexit transition period has been extended to 2020, during which time access to the single market and the customs union will be maintained.

In the last meeting, the BOE maintained the interest rate unchanged at 0.5% before a moderation in inflation of 2.7% in February. The rates are expected to increase at the May meeting.

JAPAN: The Bank of Japan kept its interest rate unchanged, at -0.1%, maintaining the purchase of bonds at the current rate.

Kuroda was re-elected as governor of the BOJ, for which continuity in monetary policy is expected.

The Tankan index of investment in capital Q1 was -0.4% (Forecast: 1.6%, Previous: 2.9%). Additionally we see weakness in the manufacturing PMI March 53.1 (Forecast and previous 53.2) that could anticipate a lower growth rate of the economy.

CHINA: The US trade measures have been focused on China, worth USD50 billion to 1,300 imported products from this country, the most affected industries will be aerospace, communication, machinery, robotics and technology.

China responds with the imposition of a 25% tariff on imports from the US of 106 products, including automobiles, soybeans or whiskey.

EMERGING: During the month of March we have interest rate cuts by the central banks of Brazil, Peru and Russia, since they have already controlled inflation levels, it is expected that the downward cycle of rates will continue, in general The markets that have reacted the best to the corrections of the last months have been, in addition, the confidence indicators have improved in a generalized way.

Financial Markets (as of March 29, 2018)

Throughout the month the main driver of the market was the commercial tension caused by the United States, which gave uncertainty to the market, in addition we have publications of the activity surveys in the Euro Zone which continued to fall after reaching maximum levels at the beginning of the year. Whereas the last update of the GDP of the region shows solid growth supported to a large extent by exports, it seems that the feeling is adverse among the actors of the economy.

For the United States, we have the publication of GDP for the fourth quarter of 2017, which expanded at an annual rate of 2.9% over previous revisions, although with a decrease compared to the previous quarter (3.2%), supported by consumption and trade. However, manufacturing indices fell back from the previous revision.

Thus, with global trade as one of the main engines of growth, the latest protectionist measures by the United States are causing uncertainty for the market as response measures are expected from the main trading partners and thus an impact generalized about global growth. A reflection of this sentiment is the taking of profits in equities by investors and the transfer of flows to assets with lower volatility.

The main stock indices during the month left a negative balance in days of high volatility. The DAX and the CAC40 indexes of the two largest exporters in Europe finished the month with decreases of -0.77% and -1.81% respectively, the Ibex35 -1.42% at levels close to the 9,600 points while the Eurostoxx50 was left at -1.11 %.

On Wall Street, the S & P500 fell -1.37% while the Dow Jones posted monthly losses on the order of -2.06%; the Nasdaq, on the other hand, finished around the 6,581 points with a fall of 2.51% monthly.

In Asia, the Nikkei225 subtracted -1.24% to reach 21,454 points, while the Hang Seng closed at 30,093 points -3.06%. As for the emerging markets, which had reacted positively in the corrections of February, during this month they reversed the trend and the MSCI - Emerging Markets index ended negative at -2.48%.

In the currency market the EUR / USD ended around 1.23, while the EUR / GBP closed the week at levels close to 0.877 Eur / Gbp. On the other hand, raw materials presented a mixed performance, Gold finished at 1,324 usd / oz (+ 0.60%) while the Brent reference oil reached 70 USD / barrel.