Anchor resume from 10 to 17 of March 2017
Monday, 20 of March 2017
Theresa May ,
The Dutch elections, the Fed's interest rate decision, and the presentation of Trump's first draft of budgets along with the Bank of Japan and the Bank of England meetings monopolized all attention during the last week.
To highlight, the G-20 meeting that took place over the weekend. The disagreement among the members of the group to ensure the commitment to maintain free and open international trade evidenced the shift towards more protectionist policies.
With no surprises in the United States, Janet Yellen acted just as the market had anticipated. Without significant changes in what it was forecasted, the expected level of growth was set on the +2.1% for the current year. And although the message was somewhat more dovish than expected, rates were normalized by 25 basis points within the range of +0,75 - 1%. In addition, 3 rate increases were confirmed for 2017, which would have already been discounted.
The reaction of the markets was slightly positive, as the closures were flat in a week in which the main selectives took a break. The S&P500 finished at levels of 2.378 (+0,24%) and the technological Nasdaq Composite at 5.901 (+0,67%).
We also had the first draft of the budgets prepared by Donald Trump. As the US president had already anticipated, the budget for environmental programs (-31%), health services (-18%) and scientific research were reduced. On the contrary, they increased to 54.000 mill. USD defense spending (+10%). Now, this draft will have to go through the Congress to be approved, and it will be in May when the most extended budgets will be presented including the taxes.
In the Eurozone the Dutch elections finally took place. The populist Wilders did not receive as much support as expected, which made the Popular Party candidate for Freedom and Democracy a winner, alleviating fears of an anti-European party boom.
The weekly closures were settled with generalized advances. The levels of the 10.000 were consolidated in the IBEX-35 (+2,39%), and the DAX-30 managed to close the week in the 12.000 after advancing a +1,10%. The selective EUROSTOXX-50 with slightly more moderate gains ended at levels of 3.448 (+0,90%).
As an event to highlight, we had the approval in the British Parliament of the law that gave the green light to Theresa May to activate the Brexit process, which we hope will take place during the last week of March.
After the meeting of the BOE the rates were maintained with 8 votes in favor. On the contrary, it surprised the vote in favor of initiating the process of normalization of types. With this, the pound closed, recovering some of the ground lost, within the 0,8662 EUR/GBP after registering a +1,29% with respect to the common currency.
On the other hand, the Euro was able to make further gains over the dollar thanks to tapering expectations ahead of the words of the ECB members, ending at 1,0736 EUR/USD (+0,63%),
On the Asian continent, no changes were introduced either in Japanese monetary policy. Kuroda ruled out introducing rate hikes in the Japanese economy leaving unchanged rates at -0,1%, and the 10-year bond yield at + 0%. By contrast, the Bank of China raised short-term rates for the third time in order to curb capital outflows and maintain the strength of Yuan.
The Hang Seng advanced +3,15% finishing at 24.309, while the Nikkei-225 made it flat at 19.521 (-0,42%).
In terms of commodities, crude oil was still waiting for new catalysts to record new gains, at 51,76 USD/Brent (+0,76%). While gold went up a +2% (now around the 1.228 USD/Onz).