Profitability Reports of our clients from October 2016

Profitability Reports of our clients from October 2016

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GLOBAL MACRO PANORAMA

EUROZONE: no changes in the reference rates or QE levels after the ECB meeting where the implementation of tappering was ruled out and where it was announced that the QE will be extended until March 2017.

  • It is expected that before Christmas the IMF will have ready a debt analysis from Greece to participate (or not) in the restructuring process.
     
  • As a point to emphasize, Greece obtained in the recent sessions a new section of EUR 2.800 million due to the implementation of new measures in the economy.
     
  • With regard to macroeconomic developments, Germany continued being the main driver of the region after reaching expansionary rates in the Manufacturing PMI of 55.

USA: the focus of attention was put on the American elections after the advance of positions of Donald Trump and the negative consequences that could have its victory for the global economy.

  • Beginning the new season of corporate results, they surprised in a positive way.
     
  • A rate increase is considered feasible for December.

UK: The British government abandoned the zero deficit target policy. In this way, we expect greater indebtedness in order to stimulate the economy.

  • The British government is not expected to wring its arm in negotiations to remain in the Schenghen space in the face of the condition imposed by the EU to implement the area of free movement and immigration. In this way it is expected that the outcome will be carried out with what they have already named as Hard Brexit.

JAPAN: the BOJ maintained their willingness to support to the economy.

  • No changes in monetary policy or types of references after the market committee. The objective of keeping the 10-year bond stable at 0% will be a priority.

CHINA: Expectations of a more flexible economy after the statements of the People's Central Bank of China fade away.

  • However, new injections of liquidity were implemented in the markets.

FINANCIAL MARKETS

  • The monthly balance in the markets was met with strong cuts at the global level. In Europe the German DAX closed down by -2,21% around 10.259, while the Eurostoxx50 lost the psychological level of 3.000 accumulating a -9,60% fall in the current year. As an exception, the IBEX35 was close to + 2% (now around 8.791).
     
  • More pronounced falls in the US and China with cuts of -4,65% in the technologic Nasdaq Composite (closing at 5.046) and -5% (around 22.642).
     
  • At the sector level, falls were also widespread, especially in biotechnology assets (-9%), Healthcare (-7%) and energy (-4%). As exceptions, the gold sector with rises of + 3% and Utilities (+ 1%).
     
  • The good macroeconomic data published and the requirement for Parliament to ratify the Brexit benefited the pound upwards (closing at 0,8895 EUR/GBP).
     
  • Iran and Iraq's refusal to freeze their production levels depressed Brent's barrel price down up to 45 USD/Brent after falling by -12%. Gold however, benefited from growing uncertainties with +3,76% (now around 1.303 USD/Onz.).