Profitability Reports of our clients from May 2016

Profitability Reports of our clients from May 2016

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FINANCIAL MARKETS

Equity markets experienced widespread advances, especially in China after the announcement that the MSCI include Chinese stocks in their indexes, scoring a + 4.16%. Strong rallies in the Japanese Selective NIKKEI225 (+ 3.32%).

Thus, in US despite declines in recent days, the Nasdaq Composite rallied a +4,36% and the S&P500 scored a +2%. While in Europe, progress was lighter (+2,36% in the DAX and + 2% in the EUROSTOXX50).

Volatility levels went down and remained with low levels (VIX: 13,47).

In the Equity sector, the main winner was the Biotechnology Industry (+ 6.,1%), followed by Healthcare (+4,35%) and Financials (+ 3%), while the sector that presented the worst performance was Gold & Prec. Metals.

Although no significant variations occurred, the common currency lost ground against its major pairs. The EUR/GBP closed at 0,7825 levels (-1%) while it fluctuated with the updated results about the Brexit, while the EUR/JPY closed around 121,08 (-0.88%).

In bond markets, the fall in yields was widespread, and bond emissions suffered further declines in risk premiums. Specially in those from Greece, following the approval of new austerity measures.

Mixed results in the evolution of commodities; while the barrel of Brent went up by +9,41% (closing near levels of 50 USD/Brent), gold fell by -3,43% in response to lower latent market volatility.

GLOBAL MACRO PANORAMA

EUROZONE: The euro maintained positive growth rates (+1,5%) without symptoms of recovery of price levels, now in deflation after the fall of -0,1% in the latest update of IPC.

  • In Greece a final package of EUR 5.400 million with austerity measures was approved in order to receive the injection of 11.000 million. Optimism was reinforced as well after that the creditors agreed to enlarge repayment terms of the debt and reduced up to +2% the interest charged.
     
  • After the last meeting from the ECB, reference rates remained unchanged and growth forecasts for 2016 increased up to 1,6%. The prospects were positive despite the requirement made to the countries asking to carry out further measures in order to boost growth and meet the Stability and to fulfill the Growth Pact.
     
  • Appearance of the new called FREXIT phenomenon due to the inability shown by the government of François Hollande to implement the labor reform before the general strike.

USA: the imminence of the Fed’s meeting (on June 15th) the focus was placed on the statements of the different members and the publication of macro data.

  • Although in the last appearance, Yellen was confident about economic developments, the publication of disappointing job creation data led to a delay at the expectations of a rate hike.

UK: the Brexit continued negatively affecting to the British economy. Following the meeting of the BOE, it kept reference rates unchanged after the meeting of the Central Bank and growth forecasts were cut to +2%.

  • On the positive side, we highlight a rebound in retail sales indicators (+1,3%) and advanced manufacturing PMI indicators (recovering levels 50).

JAPAN: High levels of debt could reach a 249% of GDP in Japan during 2016, the IMF said.

  • Due to the weakening of the latest updates from macroeconomic data, Kuroda pointed out to the possibility of introducing new expansionary measures in July and delay the rise in sales tax in two years.

CHINA: From the Popular Bank of China it was announced the need to implement major fiscal stimulus amided concerns about the potential impact of deflation on the profits of companies in the region.

  • New registrations of fall in exports (-1,8%) and imports (-10,9%).